Brexit
influx of qualified workers. France has also promised to welcome bankers and banking operations if companies lose passporting, or the ability to do business with the whole of the EU, after Brexit.” The other option The French capital Paris also started preparing for the prospect of Brexit well in advance of the referendum with a conference on the subject six months before the vote itself combined with a major lobbying effort. This has seen the city make a concerted effort to separate itself as an entity from the rest of France and its socialist president, Francois Hollande. Instead of the usual perception of France as a country with high taxes and tough labour laws, it has positioned itself as a welcoming place for bankers with a great quality of life. The city is already a major player in the asset management sector as it is the domicile of several large operators. It is also
attractive in terms of employing foreign workers, who enjoy a non-domiciled status for five years, which means their employers do not have to pay social security payments for them during this period. Despite these efforts, some bankers remain reluctant saying the city may as well be Havana or Caracas in terms of its taxes and politics. Elsewhere, both Luxembourg and the Irish capital Dublin have already been successful in attracting hedge fund business. Both domiciles specialise in back office functions for the hedge funds and will aim to capitalise if any relocate from London. Longer term, Edinburgh could find itself well placed if there’s another Scottish vote on independence as the Royal Bank of Scotland, which has a major London presence, is already headquartered there. However, research from Synechron has shown that moving banking jobs around the continent will
prove a costly exercise. The company calculated its figure using estimated relocation, hiring and redundancy costs, new building and rent costs and other infrastructure & some contingency costs. Cuddeford said, “Our calculations show that it could cost these firms on average £50,000 per employee to relocate parts of their workforce out of the UK, perhaps to financial centres such as Amsterdam, Dublin, Paris and Frankfurt.” However, Allianz Chief Economist, Mohamed El-Erian said London would remain the second global financial centre after New York despite Brexit. “Despite stiffer competition from Frankfurt, Paris, Dublin and Amsterdam, no one will reach critical mass to challenge London’s overall European dominance.” IFM
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Financial ‘passporting’ is vital to the work many banks undertake across Europe and they will have to think carefully about which city within the EU their interests and their clients’ interests will be best served Tim Cuddeford, a member of Synechron’s Business Consulting Practice
editor@ifinancemag.com
Oct - Dec 2016 International Finance Magazine
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