Bank Bosses Soften Tone on Brexit as May Extends Olive Branchby
Gone are threats of imminent exodus and economic calamity
Finance executives say London’s status not under threat
Global bank executives are softening their warnings that the U.K.’s looming withdrawal from the European Union will spur an imminent exodus of staff from London.
Bankers are gaining confidence that U.K. Prime Minister Theresa May will be able to secure a lengthy transition period that would carry them over from the current rules to whatever fresh terms of trade are agreed with the EU, according to two people with knowledge of their firm’s contingency plans. That’s led to more measured language from many of the industry’s leaders.
“Wait and see is also UBS’s attitude toward Brexit," UBS Group AG Chairman Axel Weber said Wednesday at a conference in the U.K. capital. “No doubt London will remain an important financial center. UBS will be here.”
The shift in tone, also evident from banks including JPMorgan Chase & Co. and Barclays Plc, comes after May sought to quell fears in the finance industry that her government wouldn’t fight to protect it from the fallout of Brexit when negotiations begin early next year. Bank of England Governor Mark Carney also called this week for a long transition period to give banks a chance to adapt.
“Nobody wants to make a bad decision by moving quickly with the amount of uncertainty around," Daniel Pinto, JPMorgan’s head of corporate and investment banking, said in an interview. “We will be ready to make a permanent decision once we have a better idea of the direction of travel.”
Banks continue to plan for the worst: the loss of their right to sell services freely around the EU from London after the end of the two-year Brexit negotiation period. And they are ready to start the process of moving people abroad within weeks of Britain triggering Article 50, scheduled for March, as May would still have to convince EU counterparts to agree to a transition period.
But bankers have paused on issuing warnings of pandemonium and threats to relocate abroad that circulated in the months before and after June’s referendum.
"I don’t think London will lose its gravitational pull in terms of the management of capital in any reasonable time-frame," Barclays Chief Executive Officer Jes Staley said at a conference this week. "I would not underestimate at all the ability of the U.K. to remain as creative as it’s been historically."
Before the referendum, JPMorgan CEO Jamie Dimon said he would relocate as many as 4,000 employees to the continent after Brexit. In September, UBS said that it may have to move 1,500 staff out of London after Brexit, or 30 percent of its U.K. workforce. That same month, one of JPMorgan’s top executives in Europe said there would be "pandemonium" unless there was an agreement for a transition period.
Relations between the finance industry and May’s government reached a low point at the Conservative Party conference in early October when officials said banks would get no special favors in the Brexit negotiations and suggested their threats to leave London were empty.
Since then, there has been a concerted effort within government to mend relations with the City, officials said earlier this month. That involved Chancellor of the Exchequer Philip Hammond, who campaigned against Brexit, and pro-leave lawmakers such as David Davis setting aside their ideological differences in pursuit of a common strategy to quit the EU. Davis said recently he was "determined to get the best possible deal” for London-based banks.
Recently, bankers have laced their warnings with some optimism. Royal Bank of Scotland Group Plc Chairman Howard Davies said Sunday in an interview on ITV that triggering Brexit without a transitional deal would be damaging to all parties. Asked whether a deal is likely, Davies said: "I think that it is possible."