France’s chief financial regulator has admitted that several London-based banks are negotiating to move some of their operations to Paris.
Paris is one among many cities battling for big banks to move there. Frankfurt, Madrid, Luxembourg, Dublin, Valletta (Malta) and Bratislava (Slovakia) are all in the running to become the new European capital of banking, if London loses the crown in the aftermath of the Brexit vote.
Benoit de Juvigny confirmed that “large international banks” have drawn up plans to make the move. But it is not clear whether any of these proposals are already firmed up or if they are contingency plans, to be implemented only if the need arises.
Meanwhile in London there are continuing concerns lest not only banks but “many other companies” take their business elsewhere when the City is locked out of the European Union (EU) and new trading restrictions are enforced.
These fears were first raised in October, with only a minority of banks including HSBC pledging their future to the East London financial district of Canary Wharf.
Britain, once it has left the EU, will not be able to able to offer banks the “passporting rights” which they currently enjoy. London’s post-Brexit position in regard to financial trading across Europe, is yet to be negotiated. If “passporting rights” are lost altogether, more than 5000 London-based financial services companies will be adversely affected.
Noting the competition across Europe to become the new first city of banking, Mr de Juvigny has warned of the dangers of “the race that we could have for a more lenient regulation with a more lenient regulator.” He is fearful in case such leniency leads to a repeat of the financial crisis of 2007-8; instead the financial services sector should “strictly stick to the existing legislation.”
It is believed that Citigroup, currently located in Canary Wharf, has been negotiating a possible move to Frankfurt, Germany. Spokesperson Edwina Frawley-Gangahar could not confirm how far talks have progressed. “We are evaluating our options as negotiations between the EU and UK continue,” she said. “Considerable uncertainty remains over the nature of the UK’s eventual exit from the EU, and therefore we have not taken any decisions at this point.”
Ms Frawley-Gangahar concluded her statement by reiterating that “London is, and will remain, our EMEA [Europe, Middle East and African] headquarters and a global hub for many of our businesses.”