London-based banks have shifted their position in relation to Brexit in recent weeks. Operating within the single market using so-called passporting rights has slipped down the agenda following a speech by Prime Minister Theresa May that signalled the UK would not seek to remain in the single market.
It comes as the financial services industry, which plays an important role driving demand in the prime central London sales and lettings markets, is already dealing with the twin issues of ultra-low interest rates and tighter regulation.
“The major banks were already streamlining their operations,” said Andrew Breach, head of financial services at executive search company New Street, who is in regular contact with senior bankers in London and Europe.
While he expects Brexit to accelerate this process, he believes the impact should not be overstated. “London has shown over the centuries that it is resilient and flexible enough to remain the number one or number two financial centre in the world. The plan will be to retain as many staff in London as possible but I would anticipate somewhere between 10% and 20% of staff could be affected, although it depends a lot on the negotiations.”
There are also practical barriers to moving large numbers of staff away from London, he said.
“A bank can announce that it plans to move 1,500 people but it may only end up moving 500 because not everyone will want to uproot their life. Also, these are people with 10 or 15 years’ experience who cannot easily be replaced, which could lead to staffing shortfalls in Europe.”
Compliance and risk is one of the hottest markets in London for staff at the moment but you can’t suddenly create that sort of knowledge elsewhere, and these are people that banks must have”