Saturday 24 March 2018

Morgan Stanley eyes Dublin if UK quits EU

Colm Kelleher, president of Morgan Stanley
Colm Kelleher, president of Morgan Stanley

Donal O'Donovan and John Mulligan

The top Irish executive at US financial powerhouse Morgan Stanley has said a UK vote to leave the European Union would be the most significant geopolitical event for the Continent since the end of World War II.

Morgan Stanley president Colm Kelleher said a Brexit vote could prompt the bank to move its European headquarters to Dublin or Frankfurt from London.

"This will be the most consequential thing postwar that we've ever seen," Mr Kelleher said yesterday in an interview on Bloomberg Television with Erik Schatzker. "Initially, the fallout can be controlled, but the political ramifications are actually quite profound."

"We're hoping that the British voter will show sense and listen to the economic arguments and stay," Mr Kelleher said. "But we clearly are looking at our plans," he said, adding that the New York-based firm would consider moving its European headquarters from London.

Mr Kelleher (59) joined the US bank in 1980, and has run its investment bank and trading division since 2013. He gained oversight of the brokerage in January, when he was promoted to president.

A so-called Brexit vote would cost the UK a material number of finance jobs as areas like the clearing of the euro currency would shift to the continent, he said, adding that over the longer term, there would be issues related to visas and the movement of labor.

"London cannot not suffer in the event of a Brexit vote, and the reason for that is historic," Mr Kelleher said. "London has done very well by virtue of being part of the European Union.

Its (Europe's) market, the exchanges, clearing, everything is based on London."

Even if the U.K. opts to remain, markets are unlikely to climb significantly or return to higher trading volumes because of prolonged low interest rates and growth, he said. When asked if the US election also affected markets, Mr Kelleher cited oil and China as reasons for investor indecision.

Financial markets remain on edge heading into today's referendum on UK membership in the EU. The latest polls show the outcome is too close to call, although betting shops on Tuesday put the probability of a vote to leave the EU at about 26pc. The uncertainty comes as investors are grappling with continued signs that global growth remains tepid.

The risk of a Brexit is a major concern in Ireland and other closely linked economies.

However, research from Germany shows just a third of manufacturers there fear that a Brexit will hurt their businesses, while 61pc don't think it would have any impact, according to the results of a poll published yesterday by Germany's Ifo economic institute.

Large companies with 500 or more employees are anxious about the referendum outcome and 53pc of them expect a Brexit to negatively impact their operations, however.

Only 1pc of Germany's manufacturers think that a Brexit would have a positive impact on their businesses, according to the Ifo survey. (Additional reporting Bloomberg)

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