US banking giant Morgan Stanley is said to be planning to move about €100bn of assets to Frankfurt from London.
According to Bloomberg, which has spoken to unnamed sources, the bank expects to transfer most of the assets in the first quarter of next year, when the transition period for the UK’s exit from the EU should have elapsed.
Morgan Stanley has already moved employees from London to various EU locations including Madrid and Milan, and it started a trading venue in Paris in 2018. However, there are still more than 5,000 staff in London, whereas there are only 350 people in Frankfurt.
There was no official confirmation from Morgan Stanley about the plans at the time of writing, said Bloomberg.
The lack of a financial services deal is a source of anxiety for leading UK financiers who are concerned that the capital’s dominant position faces being slowly eroded in the coming years as the realities of Brexit set in, diminishing one of the country’s most successful industries.
Banks such as JPMorgan Chase & Co and Goldman Sachs Group have also looked to strengthen their EU operations amid Brexit. The Bundesbank has said that non-German lenders were moving €400bn of assets to the country by year-end, more than doubling their combined balance sheet there.
The shifts, which for JPMorgan included €200bn in assets and 200 staff, were just the “first wave,” Dorothee Blessing, the co-head of the firm’s European investment banking unit, said in September.
When it came to the actual mass movement of employees out of London and other UK cities to centres on the Continent, analysts suggest that this might not be a short term factor in Brexit. Professional and financial services expert Professor Sarah Hall told Personnel Today: “The movement of people will be a lagging indicator because moving people is the last thing you do – once you’ve moved people out you can’t move them back very easily. It’s a big step to take part in a relocation process.”
However, by the end of October this year EY calculated that financial services firms operating in the UK had shifted about 7,500 employees and more than £1.2 trillion of assets to the EU ahead of Brexit – with more likely to follow.
EY found that since 2016 financial firms had added 2,850 positions in the EU, with Dublin, Luxembourg and Frankfurt seeing the biggest gains.
Equivalence is the biggest factor at play for international firms in London; unless agreement can be reached to allow companies to continue business across borders firms would be left with little choice but to increase their presence within the EU.