Goldman Sachs has put more than a dozen of its London-based bankers, salespeople, and traders on notice that their roles will be relocated to Frankfurt in the coming months, Reuters reports, amid uncertainty over the ability of banks to conduct continental European business from the UK after it leaves the EU:
After months of patience and private lobbying, the U.S. investment bank has decided it can no longer wait for clarity from lawmakers on how its business might be impacted by Britain’s exit from the trading bloc and is taking the steps to minimize disruption to clients.
It has informed members of its London-based derivatives and debt capital markets teams working on German accounts that their activities will be relocated to its base in Frankfurt and to make the necessary preparations to move to those offices by end-June, the sources told Reuters.
A source tells Financial News that these transfers are part of a broader strategy to move staff closer to their clients and not part of Goldman’s Brexit contingency planning. However, the report comes just days after UK Prime Minister Theresa May that the divorce agreement would not retain the existing arrangement of “passporting” rights that allow financial firms to sell their services across the EU upon being licensed to do so in just one member country. The financial sector and industry groups have lobbied the government to maintain the passporting agreement, but May said Britain would not become a “rule taker” deferring to the authority of Brussels and would instead seek “a new relationship on financial services based on this concept of mutual recognition.”
In light of this news, while this specific move by Goldman Sachs may not be part of its post-Brexit strategy, a deal that removed the ability of banks to manage continental operations from the City of London would certainly require Goldman and other banks to move much of their UK workforce to other European cities. These relocations are expected to cost hundreds of millions of dollars and could lead to tens of thousands of job losses in the City.
Last November, Goldman Sachs CEO Lloyd Blankfein, a fierce critic of Brexit, said the bank planned to split the business it could no longer do from the UK after March 2019 between Frankfurt and Paris. The bank, which employs some 6,000 people in London, has leased eight floors in a new tower block in Frankfurt that can house up to 1,000 employees. Both Paris and Frankfurt both see Brexit as an opportunity to take London’s place as Europe’s leading financial center. Germany recently revealed a plan to loosen employment protections for highly paid finance employees as part of its effort to make Frankfurt more attractive to international banks.