Brexit will weaken the city of London and give a boost to the banking communities in Frankfurt, Paris and Madrid. Not so, says Andrea Orcel, the head of the UBS investment bank.
The only beneficiary from a hard Brexit would be the U.S., according to Andrea Orcel, head of the UBS investment bank. Orcel today told an audience in London that a hard Brexit is not good for the U.K. and not good for the rest of Europe either and instead will lead to a fragmentation of liquidity in Europe, the «Business Insider» reported.
Orcel is right to be concerned. The banks based in the U.K. may lose the EU passport, requiring them to install new branches in the EU to keep the essential market access.
No Cause for Continental Glee
Numerous banks are in the process of adjusting their strategies accordingly, fueling concern about an exodus from the city. Promoters of cities such as Frankfurt, Paris, Dublin or Madrid on the other hand are giving their best to attract as many jobs as possible.
Orcel doesn’t share their joy. New York was the biggest beneficiary of a Brexit-induced exodus, he argued, given that the world’s largest financial market had a steady regulatory framework in place and was unlikely to change.
London to Stay Strong
He also said that London was likely to remain the most important banking hub in Europe given the city’s eco-system that rival markets wouldn’t be able to rival quickly. What the top banker meant with eco-system are the full range of services available to the industry, including schools, housing, cultural activities and sports.
London its way of life has always had a strong pull and bankers won’t in general like leaving the city. Orcel knows what he’s talking about as he himself is a part-time Londoner. And the head of the investment bank at UBS seems to find it tough to decide where he wants to move his bankers to: Frankfurt, Paris or Madrid.
Keeping Its Options Open
Orcel today repeated that UBS was keeping all options open. The bank originally mentioned a figure of 1,500 bankers who had to relocate. Today, the executive said Switzerland’s largest bank hadn’t yet decided on the precise figure and that it hoped that bankers would come forward for a voluntary move as it didn’t want to force bankers to do so.
However, it was paramount that the U.K. government created clarity about a transition deal as soon as possible because banks had to decide by the first quarter of next year about moving staff. Establishing a new branch and subsidiaries under the current regulatory framework required at least a year, he added.
