One of London’s leading financial regulation lawyers has a problem. His client, a major European bank, has been contemplating moving trading jobs to continental Europe in preparation for Brexit. But the spouse of one of the key members of the team doesn’t want to go. Neither, therefore, does her husband. The bank wants to keep hold of the husband and is therefore being forced to rethink. “This couple want to stay in London, and the bank will do anything it can to keep them,” he says, speaking on condition of anonymity.
This isn’t an isolated case. While bankers with European nationalities are often keen to return to their home countries, senior non-European bankers, especially Americans, are wedded to London. Lloyd Blankfein admitted as much in November when he said Goldman was opening offices in Frankfurt and Paris because American bankers prefer Paris to Frankfurt. For some, it’s London or nothing. “My wife doesn’t want to leave London and will insist I change jobs if we’re compelled to go,” one U.S. banker told us last year. Before yesterday’s revelation that Deutsche Bank will be shifting hundreds rather than thousands of staff to Frankfurt because of Brexit, Deutsche CEO John Cryan said, “bankers, technology experts and traders work in London and they want to stay there.”
This recalcitrance highlights the extent to which banks remain hostage to top staff. In an era where banks have supposedly become utilities where success is about the power of the franchise rather than the individual, individuals still hold a lot of sway. UBS acknowledged this when it asked its bankers where they want to live after Brexit. The results have yet to emerge, although UBS has also indicated that job moves out of London are likely to be less than first anticipated.
Of course, the impetus to stay in the UK may be related to more than just the availability of schooling and an established community. Yesterday’s statement by Stefan Hoops, head of Deutsche’s capital markets division in Germany to the effect that legal and support staff will moved to Frankfurt along with trade booking facilities, while the actual traders will remain in London, suggests Deutsche has espoused the views of pro-Brexit lawyers like Barnaby Reynolds. They say that “back to back” trading, where trades are made in London but booked in the EU, will be perfectly possible after Brexit has taken place.
The regulatory lawyer suggests an additional explanation. “There’s been a change of sentiment recently on the basis that it seems there will soon be some sort of transition arrangement in place,” he tells us. “Firms are under less pressure to sort things out before March next year.”
On this basis, he suggests banks are simply being pragmatic: why upset your key staff by preemptively insisting they move to Europe when it may not be necessary. In Frankfurt, meanwhile, most of the finance hiring right now is for the middle and back office, but local recruiters are confident this will change soon. “For the moment banks are just preparing a minimum set-up here,” says Tim Zühlke, partner at Frankfurt-based Fred Executive Search. “No one knows what will happen after Brexit actually takes place, but I suspect will see some recruitment in the front office this summer.”
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