EY Financial Services Brexit Tracker: Lack of job or asset moves indicate Financial Services readiness ahead of Brexit deadline, but sector voices concern over economic impact of leaving the EU

19 September 2019

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  • Volume of public statements on impact of Brexit from Financial Services firms significantly declined over the last quarter, indicating that they had largely prepared for EU departure in March
  • The number of jobs that could relocate from London to Europe in the near future still stands at around 7,000, and the value of assets which could move out of the UK as a result of Brexit remains approximately £1 trillion
  • Since the EU Referendum, 63% (30 out of 48) of universal banks, investment banks and brokerages have said they are considering or have confirmed relocating operations and/or staff to Europe on account of Brexit
  • Of all the 222 firms tracked by the Brexit Tracker, 41% (92 out of 222) have said publicly that they are considering moving or have confirmed that they are moving some of their operations and/or staff

LONDON, 19th September 2019: Over the last three months, the volume of pronouncements from Financial Services firms on the operational impact of Brexit on their business fell significantly relative to previous quarters according to the EY Brexit Tracker. This suggests that Financial Services firms paused or slowed their Brexit preparations after the October extension date was announced.

Omar Ali, UK Financial Services Leader at EY, comments:

Over the past three months, Financial Services have kept relatively quiet on the status of their Brexit plans. Given that many companies had pulled out all the stops to be ready ahead of the March deadline, much of the planning of temporary solutions for staff and operational moves has already been completed.

Firms still have significant work to do to transfer client relationships and assets.  They also need to plan for the possible crystallisation of widespread credit, market or operational risks around any exit as well as broader economic impacts. Financial Services firms have the building blocks in place, but have so far transferred fewer staff and assets to the continent than expected. So there is still lots for the industry to contend with as we approach October 31st.

The Tracker shows 21% (48 out of 222) of Financial Services companies have spoken of concerns about the economic impact of Brexit, noting the negative impacts which Brexit is having or will have on their business, including reduced profitability, deferred M&A, slowdown in lending and customer losses.

There is also evidence that Financial Services companies are now focussed on seeking to reassure their own customers, shareholders and broader stakeholders that they are prepared. In the last quarter, 8 companies have publicly stated that they are well positioned ahead of EU departure, whether hard or soft.

 

Job and Asset Move Expectations Hold Steady

As at 31st August 2019, the number of jobs that could relocate from London to Europe in the near future was flat on the previous quarter, at around 7,000; the value of assets which could move out of the UK as a result of Brexit also remained flat at around £1 trillion.

Since the EU Referendum, 63% (30 out of 48) of universal banks, investment banks and brokerages have said they are considering or have confirmed relocating operations and/or staff to Europe.   Of all the 222 firms tracked by the Brexit Tracker, 41% (92 out of 222) have said publicly that they are considering moving or have confirmed that they are moving some of their operations and/or staff on account of Brexit. Of these, 30 are universal banks, investment banks or brokerages; 31 are asset managers and 17 are insurers and insurance brokers.

Amongst the large investment banks monitored in the Tracker, nearly 1,000 jobs have already relocated to the continent. However, this figure represents just 15% of the total volume of investment banking staff currently marked for relocation to Europe from the UK.

 

Dublin remains the most popular relocation destination for financial services companies

Of the Financial Services companies monitored by the Brexit Tracker, Dublin remains the most popular location with 29 companies saying they are considering or have confirmed relocating operations and/or staff to the city. Luxembourg has attracted 25 companies in total, just ahead of Frankfurt which has attracted 24 firms to date. The companies choosing Luxembourg are predominantly asset managers and insurers, whereas Frankfurt has primarily been selected by large investment banks.

Omar Ali concludes:

There is much to do in the next six weeks. It is crucial that firms are fully familiar – and compliant – with regulatory requirements across all of the countries in which they will operate and ensure they are fully prepared in terms of contract continuity and people on the ground. Now is not the time to take the foot off the gas.

Equally, regardless of Brexit, firms need to avoid further disruption to customer relationships and position their businesses strategically for the longer term. To do this, Financial Services firms need a clear view from politicians on future access arrangements between the EU and the UK, and what forthcoming trade deals will mean for the sector. The decisions taken now are critical to ensure the City and broader UK Financial Services industry remain attractive on a global stage.

 

Notes to Editors

  • The EY Brexit Tracker monitors the public statements made by 222 of the largest Financial Services firms with significant operations in the UK across universal banks, investment banks, brokerages, wealth and asset managers, retail banks, private equity houses, insurers and insurance brokers, and FinTechs.
  • The Tracker captures public statements made by these firms on key issues across sub-sectors relating to staffing, domicile, financial impact, policy asks, product changes, remuneration and opportunities.
  • As the Brexit Tracker only captures pronouncements of the largest Financial Services firms with significant operations in the UK, some companies which have made public pronouncements on Brexit are not included in the statistics as they are not contained within the sample.
  • The Brexit Tracker runs from 24 June 2016. For this press release, data is complete as of 31 August 2019.