Barclays is taking direct ownership of its French, German, and Spanish branches away from its UK company and putting them under control of Barclays Bank Ireland, Reuters reported on Monday. The move by the UK-based international bank to expand its Irish entity, which it announced last year would become its post-Brexit European headquarters, is part of its contingency plans for ensuring the smooth continuation of its European operations after Brexit.
Barclays plans to ultimately move all of its European branches under the aegis of the Irish bank. These include corporate and investment banking businesses in Luxembourg, Switzerland, Portugal, Italy, and the Netherlands, according to Reuters. After absorbing these businesses, Barclays Bank Ireland will have total assets of around £224 billion (250 billion euros, or $286 billion), which the Irish Times reports would make it the largest bank in Ireland.
These entities will ultimately remain under the ownership of Barclays’ holding company in London, but will be directly owned by the Irish bank. This is meant to ensure that even in the event of a “no-deal” Brexit, in which the UK crashes out of the European Union with no special trade arrangements, Barclays will be able to continue serving EU customers without disruption as its businesses will still be based in a member state.
It is not clear what impact these moves will have in terms of jobs, though the Irish Times notes that the bank had already outlined plans to add up to 200 new employees in Ireland; overall, Brexit-related reorganizations at banks are expected to result in tens of thousands of jobs disappearing from the City of London.
EU “passporting” rights allow banks to access the entire EU single market from a base in a single EU country without dealing with each country’s regulatory authorities separately—these rights will be lost to UK financial firms in a no-deal Brexit, and might not be retained even if a final Brexit deal is reached. To minimize disruptions in either case, other global financial institutions have also been shifting their continental European business out of the UK.
Goldman Sachs began moving staff from London to Frankfurt earlier this year; HSBC and Lloyds have begun shifting their EU business to Paris and other European subsidiaries, Reuters adds. The total cost of these relocations could amount to more than $500 million, according to one estimate from last year. Banks are not the only companies making Brexit contingency plans; the manufacturers Airbus and BMW warned in June that failure to reach a Brexit deal would force them to pull out of the UK, taking thousands of jobs with them.
While the banks are bracing for the loss of passporting privileges, these manufacturers are worried about the potential for sudden changes in the regulatory environment to disrupt their supply chains when the UK leaves the EU. Access to talent is also a concern, however: Companies in the UK’s financial, manufacturing, and tech industries have all expressed anxiety about their ability to meet their labor needs in a post-Brexit environment, when the free movement of people will end and they can no longer easily hire workers from other European countries.