The aftermath of the Brexit effect on banks in the UK
Immediately after the result of the referendum, there was a string of announcements by major banks such as Citibank, acting on previous concern they had, regarding plans to leave the UK.
On June 25th, HSBC Holdings announced its intention to move ten thousand jobs from London – currently the site of its headquarters – to Paris, if access to the single market is lost when the UK leaves the EU.
HSBC is one of the world’s eminent commercial banks, employing 260,000 people worldwide, 48,000 of them in the UK alone.
Like other major banks, HSBC is in the middle of large-scale staff adjustment, with a projected 8,000 job losses expected in the UK. This figure is likely to rise if the decision to move the head office is eventually followed through.
Morgan Stanley is here to stay
Morgan Stanley, for one though, seems to be bucking the trend. CEO James Gorman himself has made clear the company’s determination to stay in London and adapt to the changing relationship between the UK and the EU.
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Morgan Stanley, which has similar plans to cut costs by large-scale reduction in headcount and by moving offices to low-cost territories, issued a complete denial of media reports that it was moving its London operation to Frankfurt.
Taking the view that it can take steps to stabilize its business in the UK during the minimum of two years that it will take for Brexit to materialise, the company is showing its confidence that the market turbulence that triggered the “leave” vote can be overcome by the efforts of major international banks.
What does the future hold for the UK?
The whole world is watching the progress of exit negotiations between the UK and the EU. It is obvious that the future of the UK will be determined by whether it can achieve free trade within the EEA while not being a member of the EU, like Norway, Switzerland and Iceland.
Becoming part of the EFTA is seen as important. The UK was a founding nation of EFTA when it was first established in 1960, and so a successful negotiation in this regard would in fact result in 're-joining'.
The UK left the EFTA in 1973 to join the EU and it is impossible not to see the irony of a possible return now after an absence of more than 40 years.
(By Sarah Voon)
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