Financial services companies have transferred around £800bn of assets from the UK to Europe since the 2016 referendum on EU membership while firms continue to move operations and staff to the continent, according to EY.
EY’s financial services Brexit Tracker, which monitors public statements made by 222 of the largest financial services firms with significant operations in the UK, revealed that as of 30 November 2018, 22 companies announced a transfer of assets out of London to Europe.
However, EY indicated that as not all firms have publicly declared the value of the assets being transferred, the total figure could be even higher.
UK financial services leader at EY Omar Ali explained firms are continuing to move assets, staff and operations to the EU27 in efforts to ensure continuity for their client bases.
He said: “Deal or no deal, financial services companies’ main priority is to protect their customers and investors from any post-Brexit fall-out and operational decisions are following a ‘prepare for the worst, hope for the best’ strategy.”
The Brexit tracker also found that 48% of wealth and asset managers, investment banks and insurers have stated their intentions,to move some of their operations or staff from the UK to Europe, compared to 36% of the sector as a whole.
Meanwhile, 30% have confirmed at least one relocation destination in Europe, with Dublin and Paris taking in the most recent inflow of staff or operations.
Dublin has been the most popular, attracting operational or staff inflows from 27 companies, followed by Frankfurt, Luxembourg and Paris with 17, 16 and 15 companies each, respectively.
As a result, the number of jobs that could relocate from London to Europe in the near future stands at just over 7,000, according to EY, while around 2,000 new European roles within Dublin, Luxembourg, Frankfurt and Paris-based financial services operations have also been created.
Ali said ahead of the parliamentary vote on Prime Minister Theresa May’s controversial departure agreement, which is set for the week of 15 January, “the City will be watching closely to see if the proposed Brexit deal will be accepted or whether it is back to the drawing board for the government”.
He added that as things stand financial services firms have no choice but to continue preparing for the eventuality of a no deal Brexit, and that the level of assets, staff and operations moved into the EU27 could well grow.
Ali explained: “The City is further ahead in implementing its Brexit contingency plans than many other sectors and our numbers only reflect the moves that have been announced publicly.
“The closer we get to 29 March without a deal, the more assets will be transferred and headcount hired locally or relocated.
“Inevitably, the contingency plans are for day one only, and in the event of no deal will represent the tip of the iceberg as longer-term plans will be more strategic and extensive than those publicly announced to date.”
This is reproduced from Investment Week; all views are from the publication. This originally appeared online on 7 January 2019.