As Brexit continues to dampen growth prospects for international lenders, Spanish banking giant Santander has begun to divert spare capital away from its British operations. Chaired by former government minister Baroness Shriti Vadera, Santander, one of the world's largest banks with a £59.6bn market capitalisation and operations in 10 countries, now views business in the UK as a least profitable scope for growth sources said. A banker said, “Do I think that Brazil looks more interesting than the UK for Santander? Yes.” He added, “It is the biggest risk to the attractiveness of the UK as a place for financial services companies to do business.”
Santander's pull back comes at a time when uncertainty pushed by Brexit continues to darken prospects for banks, pushing many to set up costly subsidiaries in the EU to keep business with European customers. There are several foreign companies that have retreated from making acquisitions in financial services, partly because of Brexit.
Bankers prepare plans to relocate staff
Other UK bankers at JP Morgan and dozens from Goldman Sachs are on standby for relocation to EU offices by March 29 despite Parliament's vote to delay Brexit. Around 400 JP Morgan bankers are ready for last-minute moves to financial hubs including Frankfurt, Luxembourg and Dublin as part of preparations for a no-deal Brexit. A source said it is part of the bank's plans to shift staff “as late as possible” to avoid any unnecessary disruptions. While last week's parliamentary vote in favour of an extension to article 50 has not affected the existing relocation plans, given that an extension still requires EU approval, JP Morgan is understood to be watching developments carefully.
Meanwhile, affected staff who primarily work across sales and trading, are “clear that they're on standby”. Another source said Goldman Sachs has a couple of dozen trading desk staff ready to be shifted overnight. The US investment bank employs about 6,000 people in the UK, while as many as 700 could be relocated in the event of no deal. It is known about 150 have moved to other offices in the EU so far, most of them EU27 nationals. JP Morgan employees are also bound for Paris, Madrid and Milan.
The bank, which employs about 16,000 people in the UK, recently opened a new office in Dublin, which has the capacity to host double its existing Irish workforce of 530. Liam McLaughlin, an EY partner and the firm's financial services Brexit lead, said it was not time for companies to back-pedal on their Brexit plans. He added, “Over the last three years, financial services firms have invested significant time and resources in preparing for all possible scenarios, and our view is they are unlikely to halt their plans for a no-deal in hope of a possible extension. There would be a real operational risk if firms started to stand down their no-deal preparations now only to have to try to stand them up again if no-deal becomes a reality in two weeks.”
Latest Brexit tracker report by EY estimates that London is on track to lost about 7,000 jobs to the EU “in the near future”, while about 2,000 roles are being created on the continent and Ireland in response to Brexit. Meanwhile, Morgan Stanley is ready to transfer 150 UK staff to EU offices, including Frankfurt, Paris and Dublin, while Bank of America is ready to relocate nearly 200 front-office roles to Paris by March 29 from regional offices including the UK. Around 200 of its back-office roles will also move to Paris in the long term, with 100 UK jobs already transferred to Dublin.