HSBC Ready to Move 1,000 Bankers to Paris on `Brexit', CEO Saysby
Gulliver says it's in Britain's interest to stay within EU
Bank currently employs 5,000 investment bankers in London
HSBC Holdings Plc Chief Executive Officer Stuart Gulliver said the lender would probably move about 1,000 investment bankers to Paris if Britain withdraws from the European Union, in one of the strongest statements from an executive yet about the repercussions of an exit.
The relocated positions would come from within HSBC’s global banking and markets unit, which employs about 5,000 in London, Gulliver said in a telephone interview on Monday. While an outcome in favor of Brexit would have a “significant impact” on the investment-banking division, it wouldn’t affect the consumer business, he said.
Banks executives have warned that an EU withdrawal would cause companies to cut investment in the U.K. and move jobs elsewhere. While many U.K. businesses are making statements about "uncertainty" and "disruption,” few have given concrete examples of what they would do regarding investment or employees in London.
“It’s in Britain’s economic interest to remain in a reformed EU, and that is a formal position,” Gulliver said. He spoke a day after HSBC said it had decided to keep its headquarters in London, ending 10 months of deliberations over whether to move abroad.
David Cameron is trying to negotiate changes in Britain’s relationship with the EU in the run-up to the country’s referendum on membership in the bloc. He has pledged to hold the vote by the end of next year, possibly as early as June.
Michael Rake, chairman of BT Group Plc and former deputy chairman at Barclays Plc, said last month that Brexit has already caused a loss of investment in Britain and the development could accelerate if it looks like the country will vote to leave. Barclays Chairman John McFarlane said a referendum in favor would leave the City of London’s financial district in a “significantly worse” position.
British stocks could fall 15 percent on a vote to leave the EU with a basket of domestically focused companies dropping as much as 26 percent, analysts at Deutsche Bank AG including George Buckley wrote in a note dated Friday.
“It depends on what the terms of an exit were and if they were to negotiate a passport for financial services,” Gulliver said. “There would be a period of great uncertainty and disruption while the markets waited to see what the terms of the negotiated exit would be.”
On his decision last week to cancel a global pay freeze, he said the measure was unfairly impacting junior or younger employees. The plan now is to make the savings in next year’s bonus pool, rather than this year’s salaries, he said.
“Knocking it out of the pay pool hits the more senior people,” Gulliver said. “We are hitting the people who arguably can afford it.”
The freeze, part of a drive to cut as much as $5 billion in costs by the end of 2017, was lifted after just two weeks, following an employee backlash.