By Anjuli Davies and Andrew MacAskill
LONDON, March 29 Banks in Britain have tried to
reassure their London staff over possible Brexit disruption,
including a shift in jobs to continental Europe, as Prime
Minister Theresa May triggered formal EU divorce proceedings on
Investment banks Goldman Sachs, JPMorgan Chase and Nomura
were among those who sent messages to employees in London,
Europe's biggest financial centre, as they work out how to keep
serving clients across the European Union after Britain leaves
Morgan Stanley also informed employees in Europe that no
decisions had yet been made on changes for when Britain departs,
leaving the EU with 27 member states.
But Rob Rooney, CEO of Morgan Stanley International, was
blunter in updating them on the work of a committee comprising
senior leaders at the bank which has been making Brexit
contingency plans for over a year.
"As prudence would dictate, we have been preparing for a
worst case scenario, in which we would need to establish a more
significant entity within the EU 27," Rooney said in a memo to
staff on Wednesday seen by Reuters.
"We continue to monitor the situation closely and, when
appropriate, will take the necessary decisions and begin to
execute on our plans."
JPMorgan Chase said in an internal memo that it has spent
the last few months reviewing its options. "While our objective
in the short term is to limit the number of staff moves, there
will inevitably be some staff who will be asked to consider
relocation," the bank said.
Richard Gnodde, CEO of the European arm of Goldman Sachs,
stressed that no big changes were imminent even though he said
last week that the Wall Street bank would begin by moving
hundreds of staff as part of its "contingency plans" for Brexit.
"All of this work leads us to conclude that although Brexit
may well bring some changes to our footprint, a lot will
continue to operate as it does today," he said in a voicemail
sent to all London employees' phones last Friday.
May's formal notification of Britain's intention to leave
the EU starts two years of negotiations allowed under the bloc's
treaty that will shape the future of the country and Europe, as
well as London's place as a global financial centre.
Gnodde said Goldman Sachs could make long-term decisions
only after those negotiations were complete.
"We also understand that you will have many questions
regarding the implications of Brexit," he said. "We are
sensitive to those concerns, and want you to know that we will
share any information on changes that will impact our European
footprint as quickly as we can."
May has said Britain will not try to remain in the EU's
single market, meaning London-based financial services companies
would not be able to sell to clients in the remaining 27 member
states in practical terms, unless a special deal were struck.
Fearing they could lose top-performing staff, banks are
treading carefully as they contemplate moving London-based
workers to continental centres such as Frankfurt, Paris and
Luxembourg, or paying them off and hiring employees locally.
Nomura of Japan said in a message to staff on Wednesday that
although it had been actively planning for Brexit, no final
decision had been made on either location or timing of any new
European entity, according to a source familiar with the matter.
Banks are enacting two-stage contingency plans for Brexit.
The first involves relatively small numbers of jobs to make sure
the requisite licences, technology and infrastructure are in
place, while the next requires longer-term thinking on what
their European business will look like in the future. This is
when bigger moves might take place.
The British Bankers' Association and the City of London
Corporation, which runs the financial district, said in
statements it is crucial that after the conclusion of the talks
banks retain as much access to the single market as possible.
They both also said that Britain should announce a staggered
departure from the EU that would allow British-based banks to
prevent market disruption.
Regulatory and banking experts working for the City of
London and lobby group TheCityUK are drawing up proposals for a
'mutual recognition' system.
Under this, the EU and Britain would broadly accept firms in
each other's financial markets because their home regulatory
systems apply similar standards. The aim is for London-based
banks to keep serving continental clients, although sceptics say
mutual recognition is largely untested globally and would
struggle to win approval within the EU.
(Editing by Susan Fenton and David Stamp)