Britain’s largest banks set to pull out of UK over Brexit, banking chief warns

Britain’s largest banks are getting ready to relocate out of the UK early next year over fears around Brexit, while smaller banks are making plans to get out before Christmas, the chief executive of the British Bankers’ Association warned on Sunday.

Writing in The Observer, Anthony Browne warned that £20 billion trade in financial services is at risk and “the public and political debate at the moment is taking us in the wrong direction.”

“Their hands are quivering over the relocate button. Many smaller banks plan to start relocations before Christmas; bigger banks are expected to start in the first quarter of next year.”

Brown’s comments build upon those made at the British Bankers’ Association annual conference last week, when he said banks had already “set up project teams to work out what operations they need to move by when, and how best to do it.”

Following the UK’s vote to exit from the EU, Prime Minister Joseph Muscat indicated that Malta could serve as the UK’s gateway into the EU once the country left the union. The UK’s exit from the European Union could provide new opportunities for Malta and for Maltese companies, Muscat had said.

Brown wrote that the government, particularly Brexit secretary David Davis and chancellor Philip Hammond, were “making the right noises” but nonetheless, the UK was in danger of “talking ourselves into defeat before negotiations have even begun.”

A hard Brexit would involve the UK leaving both the single market, a central pillar of which is freedom of movement, and the customs union, which could potentially reintroduce tariff and non-tariff restrictions on British imports and exports.

However, the UK government’s intention to take control of the freedom of movement into the UK – coupled by EU ministers’ warnings that the four freedoms of the EU will not be decoupled – have stoked fears among bankers of retaining the present terms of trade for banks.

He said that for banks, the UK’s exit from the European Union does not simply mean additional tariffs being imposed on trade, but also begs the question of whether banks will have the legal right to provide their services.

Browne, whose organisation has been in intense negotiations with the government, further warns the EU that banks based in UK are currently lending £1.1tn, therefore “keeping the continent afloat financially”, and that this arrangement is at risk.

It has been reported that Goldman Sachs is among those drawing up plans to transfer around 2,000 of its employees to a rival European city should the UK lose its passporting rights.

The industry body, TheCityUk, has claimed that up to 70,000 financial jobs could be lost if Britain leaves the EU without a new credible relationship in place for the City of London.