Banks ready Brexit changes, but tell staff no panic

Steve Slater

LONDON, March 29 (IFR) - Major banks said they won't be

rushing their decisions on footprint changes due to Britain's

exit from the European Union, but said some staff will

inevitably have to move and some institutions are looking at

buying property in other cities.

Britain invoked Article 50 of the Lisbon Treaty on

Wednesday, which started the two-year process of the country's

divorce from the EU. The move did not trigger a rush for banks

to reveal their plans, but some updated staff on what was

happening.

"This is a complex process and we will not rush into any

decisions," two of JP Morgan's most senior executives told staff

in a memo seen by IFR.

"We have spent the last several months reviewing the many

variables in this process - client needs, employee

considerations, regulatory requirements, operational risks, our

inventory of licences, political issues in the region and dozens

of other factors," said the memo from Daniel Pinto, head of JP

Morgan's corporate and investment bank, and Mary Erdoes, head of

asset and wealth management.

JP Morgan warned before the Brexit vote it could move 4,000

of its 16,000 staff, potentially affecting staff in London and

Bournemouth in the south of the country.

"While our objective in the short term is to limit the

number of staff moves, there will inevitably be some staff who

will be asked to consider relocation," the US bank said in

Wednesday's memo.

The memo said it had options across the EU in terms of where

to move operations and legal entity structure even if Britain

loses its ability to passport financial services into the EU.

It will use its existing legal entity structure in the short

term so it can immediately do business when Brexit occurs, and

said it will continue to make adjustments as the two-year

negotiation period proceeds.

Goldman Sachs, another US bank with major European

headquarters in London, told staff there would be a

"considerable period of time" before the terms of Brexit become

clear. "Only when these negotiations are complete will we be

able to make long-term decisions with respect to our footprint,"

Goldman's European CEO Richard Gnodde told staff ahead of

Article 50 being triggered.

Gnodde said the bank had been working to prepare for the

range of outcomes and will need to take actions in the coming

months to keep its options open.

"We have a tightly defined team implementing these

contingency plans which will involve upgrading various European

locations, including acquiring additional real estate, securing

access to market infrastructure and applying for additional

licences to conduct business," Gnodde said.

Gnodde said last week the first phase of those contingency

plans was likely to involve "hundreds of people" rather than

many more than that.

HSBC, Europe's biggest bank, told staff up to 1,000

London-based jobs that support activity in continental Europe

may need to move, repeating previous guidance. It has said most

of those will move to Paris, and will still leave the bank with

45,000 staff in the UK.

It said it wanted "to ensure our colleagues working outside

their home countries have certainty of residency as soon as

possible" in the message to staff on Wednesday, seen by IFR.

It added: "We are confident that HSBC's strong position and

subsidiary model in Europe will enable us to easily flex to

serve our clients' interests."

About two-thirds of major financial firms with operations in

Britain are yet to make any public statement about their plans

for Brexit, however, according to a study.

Consulting and advisory firm EY said 153 out of the biggest

222 firms with operations in Britain had not said anything about

the impact Brexit could have on their domicile, operations or

staff location.

EY said 53 of the 222 firms are actively moving some staff

or part of their operations out of the UK, or are reviewing

their domicile as a result of Brexit.

(Reporting by Steve Slater; Editing by Ian Edmondson)