“We are now assuming a hard Brexit with additional conservative assumptions,” Faryar Shirzad, Goldman Sachs’s co-head of government affairs, said Saturday in Washington. “Until we are told otherwise through tangible, meaningful, reliable declarations of some sort then we just have to keep moving forwards” with the most pessimistic contingency plans.
Also speaking in the U.S. capital during the annual meetings of the International Monetary Fund was Daniel Pinto, head of JPMorgan’s investment bank. He too said he’s readying for a “no-deal” scenario that doesn’t allow banks to easily conduct business across the Continent from operations based in London.
“We need to continue servicing clients, and so that’s what we are going for,” Pinto said. “Two years is a very short period of time.”
Read more: Banks’ Brexit moving costs are seen topping $500 million each
That’s prompting firms to explore alternate European locations, intensifying pressure on Prime Minister Theresa May’s government to secure a transitional arrangement with the EU to extend existing trading rules until a permanent trade pact is sealed.
“Talk of a standstill arrangement is encouraging,” but Goldman Sachs wants to see evidence it will happen, Shirzad said during a panel discussion.
Bundesbank Executive Board member Andreas Dombret, a fellow panelist, called a hard Brexit the most likely scenario, but said he doesn’t “see a financial-stability risk because that risk is materializing over a two-year period.”
Read more: No-deal Brexit would cost $15,000 per person, Rabobank says
Pinto said JPMorgan is already bolstering its use of offices in Frankfurt, Luxembourg and Dublin. “We have been working on this for over a year now so we have a good plan and we are not expecting any client disruption,” he said.
JPMorgan plans to move an additional 60 jobs to Paris, French Finance Minister Bruno Le Maire said after meeting with the bank’s CEO, Jamie Dimon, in Washington. France’s shift to more flexible labor laws and looser regulation were among reasons Paris was selected, according to the finance minister.
“We’re not doing all this for 60 jobs. The stakes are much bigger and the goal is to win much more business than that,” Le Maire said. “It’s not at all inevitable that London remains Europe’s largest financial center.”
Under one of the most drastic plans, Deutsche Bank AG may start moving roughly half its U.K. workforce to Frankfurt and Berlin as soon as next year, people familiar with the matter have said.
Read a QuickTake: Will Brexit trigger an exodus of banks from London?
Taking a more optimistic stance, Barclays Plc CEO Jes Staley reiterated he doesn’t view Brexit as “as much of a risk to the financial sector as some people have said.”
He recalled attending a recent conference of investors, where nobody raised a hand when he asked the audience how many were engaged in serious conversations with their employer to move abroad because of Brexit.
“The banks will go where the capital is,” Staley said. “And if the capital that drive financial markets stay in London, then the banks will stay in London.”
— With assistance by Svenja O’Donnell
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