LONDON, October 11, 2017 /PRNewswire via COMTEX/ — LONDON, October 11, 2017 /PRNewswire/ —
Dmitry Leus of East-West Connect wrote an article which was published in EU Today, responding to two senior business figures who have spoken out in recent days about the need for clarity for the banks regarding a transition deal between the UK and the EU, in order to prevent firms moving jobs and business out of the UK.
Mr Leus wrote: “Both Sam Woods, a deputy governor at the Bank of England, and Howard Davies, Chairman at the Royal Bank of Scotland (RBS) have emphasised the need for speed, but they differ on just how long the UK government has got before more significant numbers of banking jobs start to leave London.”
Mr Leus added: “Sam Woods said in a speech at London’s Mansion House that firms would activate their Brexit contingency plans if there was no deal on a transition period by Christmas (December 2017) which would lessen the impact of a hard Brexit in March 2019. He also repeated his concern about the likely strain on the Bank of England’s ability to supervise the financial sector as a result of the changes firms needed to make.”
Mr Leus said: “Howard Davies of RBS seems to think the government has slightly longer to agree the transition deal, with the date he states being in five months time, taking us into March 2018. He may be slightly more generous in his timeline, but he was still very clear in his interview on Sky News that there will be growing consequences if no deal is reached soon.”
Mr Leus went on to explain: “One of the major challenges for banks is London is an EU rule that allows a bank to locate a fully regulated entity on one EU member state and operate across other states without the need for additional local regulation in the other countries. This is commonly called ‘passporting.’ This practice allowed London to be very much the financial hub for the rest of Europe. Indeed, a large proportion of Europe’s hedging, foreign exchange, lending and securities transaction have taken place in London. The big challenge facing banks is how to manage the future of their European business once London is no longer a part of the EU. This is a key issue the banks are planning for and want precise information about.”
He concluded: “Howard Davies and Sam Woods are of course right to warn that clarity is needed quickly before more banking jobs leave London. But we are still talking about relatively small numbers. To date, no single European city has quite emerged as a replacement for London. The banks are varying in where they choose to move these operations. Yes Frankfurt has been successful in luring quite a few banks, but not without a healthy showing from other cities. We still should not overplay these comments and other announcements by the banks. None of these institutions are abandoning London. They are just planning for the possibility that certain, specific operations could have to be conducted elsewhere. The fact that Citigroup’s ‘move’ actually only entails a mere 150 of its 6000 strong UK workforce shows that there really is still no exodus and nor is there likely to be.”
About East-West Connect
East-West Connect is a London-based forum focused on investment risk and opportunity in Central and Eastern Europe. We provide news and analysis about the investment and economic climate of the region.
East-West Connect was founded by Dmitry Leus, an entrepreneur and banking and financial services professional. He started his career as FOREX specialist at Russia’s Lesprombank in the mid-90s. He later became Head of International Settlements of the bank, and in 2000 began running the South-West section of Lesprombank. In 2002, he was appointed Chairman of the Russian Depository Bank. In 2006 he founded Zapadny bank, where he worked as Chairman until late 2013. Since 2014, the e-commerce market of Europe and the UK is of special interest for him and he actively invests in the European and CIS financial sector. In parallel, he works as an expert in business development and helps large corporate companies build effective management and improve the quality of the services provided.