HSBC says companies shifting business due to Brexit
HSBC has said some of its largest clients have already asked for their business to be routed through the bank's offices in mainland Europe and aren't waiting to see what Brexit deal the UK hammers out with the continent's trading bloc.
"A small number of our larger clients are asking us to book more of their trade and foreign-exchange activity in their French operation through our Paris office than their UK divisions," said Noel Quinn, head of global commercial banking.
Executives at multinational companies are "making plans to ensure they can continue to trade irrespective of the outcome. They can't afford to wait for a decision that may not emerge until two years' time".
Global banks have started arranging for some British-based operations to move to new or expanded offices inside the EU after British Prime Minister Theresa May triggered discussions to leave the trading bloc.
Privately, many executives at the world's biggest firms are now assuming the result will be a "hard Brexit" - the loss of their right to sell services freely around the region from the UK.
That means they have to put contingency plans in place before the end of the two-year negotiation period.
Mr Quinn, who sat on the executive committee of HSBC, Europe's largest bank, since December 2015 said some companies were also evaluating whether to "flip" their regional head offices to European cities from Britain.
This would require them to reclassify the UK branch as a country office that would become a subsidiary of the continental headquarters, he said.
This may result in some small-scale job moves and lost taxation for the UK government, as firms start reporting the purchase and distribution of services elsewhere.
"Larger companies that already have a pan-European presence are going to find it easier to invoke a plan B than the smaller ones," Mr Quinn said. "They're not losing faith in the UK, but the reality is businesses or even individuals themselves will start making their decisions before the answer emerges from the Brexit process."
HSBC chief executive Stuart Gulliver has said as many as a thousand of HSBC's traders and salespeople, who generate about 20pc of the investment bank's revenue, will relocate from London to Paris after Prime Minister May confirmed the UK would leave the single market. Some French staff have already asked to return home, sources said.
The bank decided to keep its headquarters in London rather than move to Asia or France in February 2016 after a year-long review. (Bloomberg)