Hammond Seeks to Keep U.K. a ‘Great Place’ for Banks Post-BrexitBy
Chancellor met today with HSBC, LSE, Morgan Stanley officials
Banks are worried they will lose easy access to EU market
U.K. Chancellor of the Exchequer Philip Hammond sought to calm bankers concerned their industry will suffer from Brexit, telling them he understands the risks facing them and the importance of limiting the fallout on the finance industry.
“It is important Britain maintains its status as a great place for financial services,” Hammond said in a statement. “The government stands ready to help the sector maximize the opportunities that leaving the EU presents.”
Hammond spoke after meeting in London on Wednesday with financiers including Douglas Flint, the chairman of HSBC Holdings Plc, Shriti Vadera, the chairman of Santander UK, and Xavier Rolet of the London Stock Exchange.
Banks are applying pressure on the U.K. government to ensure they are not hurt by Brexit as Prime Minister Theresa May signals that when striking a divorce deal she will focus on controlling immigration ahead of ensuring continued access to the single market.
That leaves doubts over so-called passporting, which grants banks based in London the right to raise funds and offer services elsewhere in the EU without tariffs. UBS Group AG and Lloyd’s of London this week became the latest institutions to warn they will cut staff in the U.K. if their operations are threatened by Britain leaving the EU.
Speaking in the House of Commons, May refused to say whether her country will end up staying in the single market, saying she planned to “build a new relationship with the EU” that would feature “the right deal for trade in goods and services.” Her negotiating hand is not yet ready to be shown, she added.
Financial services have some leverage over the government given they employ over 1 million people in the U.K. and contribute more than 60 billion pounds ($80 billion) in tax a year. TheCityUK, a lobbying group, today reiterated an industry-wide call for a “transitional arrangement” in which the current rights of banks in the EU are safeguarded beyond Brexit so they and financial markets have time to adjust.
“Ensuring U.K.-based financial institutions have continued ability to support the needs of businesses and individuals and to add value to the economy as a global financial center, is in all our mutual interests,” said the European Financial Services Chairmen’s
Advisory Committee that met Hammond.
Anthony Browne, CEO of the British Bankers’ Association, told a House of Lords committee today that he would prefer an arrangement “as close as possible to what we have at the moment.” In the meantime, he urged the government to provide a “road map” for negotiations so that his members could make plans.
“They clearly start needing to make decisions really quite soon,” said Browne. “The more certainty the government is able to give, the less risk there will be of disruption.”
Others on the guest list for the meeting with Hammond were Robert Rooney of Morgan Stanley, Lloyd’s of London Chairman John Nelson, Barclays Plc Chairman John McFarlane and Adrian Montague of Aviva Plc.
Two reports published today suggest London will maintain its status as a global financial hub despite Brexit. In a report titled “The City Boys are Here to Stay,” the Centre for Policy Studies, a research group, said the U.K. enjoyed “natural advantages” for finance including its competitiveness, legal system and sound regulations.
Meantime, PricewaterhouseCoopers LLP named London the best place to do business in the world for a second year, albeit based on social and economic data before the June 23 referendum.
“London will remain a major financial center,” Ravi Menon, head of Singapore’s central bank, said on Tuesday . “At the margin there will some shift to other financial centers in Europe.”
Sign up to receive the Brexit Bulletin, a daily briefing on the biggest news related to Britain's departure from the EU.