In a project dubbed 'Bowline', Bloomberg reports that Deutsche Bank may shift about 300 billion euros ($350 billion) from the balance sheet of its U.K. entity to Frankfurt as client trading and assets migrate to the continent following Britain’s decision to leave the European Union. While not the first bank to threaten to move post-Brexit, the scale of asset movement is the largest yet.
Deutsche Bank’s balance sheet listed 1.59 trillion euros in total assets at the end of last yea and much of its trading in Europe is traditionally booked in London. But, as Bloomberg reports, the Brexit-contingency project calls for Frankfurt trading to go live in September 2018 and for the balance sheet migration to be completed by March 2019, said the person, who asked for anonymity in discussing internal matters.
Chief Executive Officer John Cryan told employees in a recent videotaped message that he’s girding for a hard Brexit, with the “vast majority” of trades currently booked in London probably moving to Frankfurt, but the bank hasn’t officially detailed its plan.
People familiar with the matter told Bloomberg that the lender intends to move chunks of trading and investment-banking assets from London to Frankfurt, with the jobs of several hundred traders and as many as 20,000 client accounts likely to be shifted.
“There’s an awful lot of detail to be ironed out and agreed,” Cryan said in the video. “But inevitably roles will need to be either moved, or at least added, in Frankfurt.”
Deutsche Bank's plan notes that trade and balance sheet migration will begin in September 2018, with six months required for the move of the balance sheet, the person said. The bank plans to start informing clients from September 2017 that their contracts will be switched to Frankfurt. It wants to have built front-to-back technology and processes by June 2018, according to the person.
This report comes just days after Cryanb warned his staff that the bank "will assume a reasonable worst outcome" from the UK's talks with the European Union, according to a Bloomberg News report.
"The worst is always likely to be worse than people can imagine," Cryan said.
Britain is expected to lose financial passporting rights, which allow banks with a base in the UK to sell products and services to customers and financial markets across the EU. Frankfurt is emerging as a popular destination for many international firms choosing a post-Brexit base. Three Japanese lenders, Daiwa, Sumitomo Mitsui Financial Group, and Nomura, have all confirmed in recent weeks that they will set up new post-Brexit bases in Frankfurt.