Thursday 29 September 2016

BREXIT: Britain's financial sector reels after Brexit bombshell

Sinead Cruise, Andrew Macaskill and Lawrence White

Published 24/06/2016 | 07:47

Sterling
Sterling

Britain's 2.2 million financial industry workers face years of uncertainty and the risk of thousands of job cuts after the country voted to quit the European Union, leaving question marks over London's status as Europe's premier financial centre.

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The 'Vote Leave' campaign fronted by a slew of Conservative lawmakers and financial industry veterans claimed victory over its 'Britain Stronger in Europe' rival, after 52 percent of Britons voted to support their plan to leave the 28-nation club.

Bankers' early confidence that Britain would remain within the European Union quickly evaporated after early vote counts suggested the "leave" camp had the upper hand, sending sterling plummeting to a thirty-year low and heart-rates racing on trading floors from London to Hong Kong.

A leave vote means the future of Britain's financial services industry is now hanging in the balance.

All depends on the divorce between Europe and Britain, the latter's ability to retain access to the European free market, and cope with the volatility that has seen sterling nosedive against major global currencies.

Mood in the restaurants and coffee shops in the high-rise banking hub of Canary Wharf, home to JPMorgan JPM.L, Citi (C.N), HSBC (HSBA.L) and Barclays (BARC.L), was sober and contemplative, with job security fears rising to levels unseen since the 2008 financial crisis.

Investment banks have already warned they could move thousands of jobs if Britain opts out of the EU, while the European Central Bank has signalled it could force euro trading out of London, the world's largest foreign exchange market.

Wall Street bank Morgan Stanley (MS.N) could move around 1,000 of its roughly 6,000 employees currently in Britain on to the Continent if the country votes to leave the EU, a person familiar with the matter has told Reuters.

Jamie Dimon, CEO of rival JPMorgan told staffers his bank "may have no choice" but to overhaul its UK business model, casting a pall over its 16,000 strong workforce.

However the City of London Corporation, which oversees the capital's financial district said the leave vote should not lead to a major exodus.

"There will be no mass exit of banks and financial institutions from the Square Mile," Mark Boleat, policy chairman for the City of London Corporation said in statement.

"The general view of the City is that the government should push for the UK to retain our access to the single market," Boleat said.

Sources at banks said memos emailed internally to rattled employees advised them to think about clients first.

"I've convened a big team meeting at 0800 GMT as the juniors are freaking out. I will tell them to focus on their job and wait for the volatility to pass but the reality is much, much starker, we'll have a crash and big layoffs," a senior investment banker at a U.S. bank told Reuters.

Reuters

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