U.K. Banks Said to Seek Closer U.S. Financial Ties After BrexitBy
TheCityUK forms committee to explore potential trade deals
Top executives from JPMorgan, Barclays leading efforts
Top executives from the U.K. and U.S.’s largest banks have set up a group to foster closer ties in financial services between the two countries after Britain leaves the European Union, according to two people familiar with the matter.
TheCityUK, the industry lobby group, has created a steering committee led by managers at Barclays Plc and JPMorgan Chase & Co. to explore potential trade and investment deals after Brexit, said the people, who asked not to be identified because the efforts are at an early stage. Barclays Chairman John McFarlane, who also leads TheCityUK, is overseeing the project. The bank’s Chief Executive Officer Jes Staley is heading a U.S. subcommittee, while JPMorgan’s European Chairman Mark Garvin has a similar role in the U.K.
The committee is working with the U.K. Treasury and its financial services trade and investment board, the people said. It’s not yet clear what agreements will be pursued and talks are informal because the U.K. isn’t officially allowed to negotiate new deals until it legally leaves the EU, which has governed the U.K.’s trading relationships for the past 44 years. A spokeswoman for TheCityUK declined to comment on new committee.
Prime Minister Theresa May’s plan to pull Britain out of the EU single market has left London’s bankers fearful the U.K. capital will lose business to other financial centers inside the trading bloc such as Frankfurt, Paris and Dublin. To soften the blow, the government is seeking early guidance on what agreements may be struck with countries such as the U.S., Australia, Canada and South Africa. Banks appealed last year to the U.S., Japan, and other governments, to help them make the case for safeguarding London’s status as an international financial hub.
Investment banks in London are increasingly concerned U.K. and EU negotiators won’t reach an agreement over what May has called a “phased implementation period” for Brexit, one of the people said. This would give firms an extra two to three years to restructure their businesses on top of the official two-year negotiation period under Article 50 of the EU’s Lisbon Treaty, which begins the exit process. The Prime Minister has promised to trigger Article 50 this month.
Michel Barnier, the EU’s chief Brexit negotiator, has said the bloc won’t discuss the future terms of British access to the single market, or any temporary transition arrangement, until progress is made on the U.K.’s so-called “divorce payment.” That could be as much as 60 billion euros ($64 billion) and has been opposed by British lawmakers.
Bankers have threatened to speed up applications for banking licenses for new subsidiaries inside the EU and start relocating staff and infrastructure from London if they are not told, soon after Article 50 is triggered, whether a transition agreement will be reached.