Banks Warn London Facing Brexit "Point Of No Return"

During his trip to London this week, US Commerce Secretary, Wilbur Ross, wasn’t only defending revelations in the Paradise Papers that he’d invested in a shipping company with ties to the Putin family. He also attended a “closed-door meeting” with executives from JPMorgan, Goldman, HSBC and other banks. The meeting took place over lunch in the exclusive St James’s District (hedge fund land these days) at Wiltons restaurant. Wiltons, if you’re not familiar with it, started as an oyster stand in 1742 before developing a clientele of English aristocrats and foreign dignitaries and latterly, bankers. Ian Fleming, creator of the James Bond novels and bon vivant,  listed it as one of his top 10 restaurants in the 1950s.



During lunch, the banks warned Ross that time is running out for the UK government. The failure to provide clarity on Brexit means that they will be forced to start moving jobs out of London. According to the FT:

A group of large financial institutions with big London operations, led by Wall Street’s pre-eminent banks, have told the US commerce secretary that Britain’s unstable government and slow progress in Brexit planning may force them to start moving thousands of jobs out of City in the near future. The warnings came on Friday during a closed-door meeting between executives from the banks, which included JPMorgan Chase, Goldman Sachs and HSBC, and Wilbur Ross during the US commerce secretary’s visit to London, according to people briefed on the discussions.

 

Those briefed on the talks, which were held over lunch at Wiltons restaurant in London’s exclusive St James’s district, said the banks were particularly concerned by the failure of Britain to provide clarity over whether it will secure a transition deal to smooth the changing regulatory regime after the UK leaves the EU. They warned they had even less clarity over what a final Brexit deal will look like. Absent clarity from the government about post-Brexit plans, the executives said jobs would move back to the US or to other European capitals as banks begin to enact their worst-case contingency plans, the sources said. ”There was broad discussion around the lack of progress in the Brexit talks and some discussion around various political scenarios,” one person briefed on the talks said.

Not surprisingly the banks declined to comment when contacted by the FT, which also discovered that Morgan Stanley failed to show up to the gathering. Shame on it. The FT’s anonymous sources emphasized that bank executives communicated a greater level of anxiety regarding Brexit negotiations than in the past. Decisions on job relocations are imminent, as FT explains:

US banks have been among the loudest critics of Britain’s decision to leave the EU since last year’s referendum, with Goldman boss Lloyd Blankfein recently tweeting he anticipated “spending a lot more time” in Frankfurt post-Brexit. But the recent warnings in private meetings with Mr Ross — as well as similar soundings taken by the City of London Corporation, the capital’s local government, on a fact-finding mission to Wall Street and Washington — included a level of urgency not seen in previous criticisms, those present said. The banks warned Mr Ross that a “point of no return” is fast approaching, when they must start moving jobs, capital and infrastructure in order to meet the March 2019 Brexit deadline if no transitional deal is secured.

In London’s City A.M. financial newspaper yesterday, the City of London’s policy head, Catherine McGuinness, highlighted rising nervousness in the US financial sector about Brexit.

City of London Corporation's policy chief Catherine McGuinness was told the sector had moved beyond its initial "surprise" and "curiosity" at the events unfolding on this side of the Atlantic, with fear creeping in that no real movement had been made since last summer's referendum. “The message was that this is taking too long and it may have implications beyond your borders," McGuinness said. "[They] are becoming nervous," she said. "It wasn’t just curiosity, it was concern at the lack of progress that we have been making, and nervousness that it had implications beyond Europe’s borders in terms of causing disruption to markets.”

 

While New York expects to benefit from some of the disruption, the overriding sense was that Brexit could cause global ripples if progress failed to materialise, she added. Fears that the UK would simply "crash out" were also growing. She was speaking after a three-day fact-finding mission, where she met US Treasury officials, as well as Commodity Futures Trading Commission (CFTC) chairman Chris Giancarlo, and representatives from the International Swaps and Derivatives Association (ISDA). McGuinness noted that the recent IRSG report, which set out a blueprint for how financial services might continue to do business after Brexit, had been welcomed in the States. But she acknowledged that progress on the matter back home was painfully slow, saying she had "very little sense" of when - or if - a financial services position paper could be expected from the government.

Back to the lunch between Ross and the bankers, the one positive note which emerged for the UK government is that the prospect of a Labour government headed by Jeremy Corbyn fills them with dread. That’s scant consolation, however, as the banks are believed to have drawn up contingency plans to shift 10,000 jobs out of London in the short-term. This number was confirmed by the Bank of England last week. However, the FT notes a much larger exodus is possible if the government fails to set up a transitional deal as part of Brexit.

Sam Woods, deputy governor (of the Bank of England), said that a longer-term 75,000 job-loss figure cited in a previous report by Oliver Wyman, the consultancy, was “plausible”. Mr Woods also said that a transitional deal was an asset whose value diminished through time, as banks scrambled to get in place for March 2019.

Still, we wonder how sympathetic to London’s Brexit challenges Ross was during the lunch. After all, this is the man who said last December that Brexit was a “God-given opportunity” for other countries to take business away from the UK. Finally, it also crossed our minds as to who picked up the bill? We doubt that it was Ross, or Deutsche Bank, if it was invited. Our guess is Goldman, but what was the catch?

Comments

Laowei Gweilo JRobby Wed, 11/08/2017 - 06:29 Permalink

banks leaving UK only benefits the USwtf cares, really, if it makes the US even more appealing.... US was born shunning London and can be re-born shunning Islamalondon sure, sure, appealing to blood sucking leeches is disgusting, but leaches only attach themselves to healthy animalsi'd rather be leech bait than whatever corpse the leaches are falling off of plus, means more bullseye targets when the revolution arrives :D

In reply to by JRobby

JohnGaltUk Sy Kloine Bee Wed, 11/08/2017 - 06:15 Permalink

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They will be Jo Cox'ed if they do. She only found out belatedly the feelings of her electorate. Time will tell if the lessons have been learned. These politicians can be very stupid at times though, after the 2011 riots where many parts of London were on fire, should have been the canary in the coalmine moment.

In reply to by Sy Kloine Bee

Ghordius JohnGaltUk Wed, 11/08/2017 - 08:51 Permalink

Jo Cox, Member of the British Parliament, mother of two, was killed by a person commonly regarded as insanewhile she was campaigning for Remain, on an open street, a week before the referendummeanwhile, your repeated use of her name here while maintaining that the whole British electorate shares the feelings of this insane guy is just this:disgusting

In reply to by JohnGaltUk

JohnGaltUk Ghordius Wed, 11/08/2017 - 09:39 Permalink

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When the representative body have lost the confidence of their constituents, when they have notoriously made sale of their most valuable rights, when they have assumed to themselves powers which the people never put into their hands, then indeed their continuing in office becomes dangerous to the state, and calls for an exercise of the power of dissolution.” “what country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to facts, pardon and pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure.” “The natural progress of things is for liberty to yield, and government to gain ground

In reply to by Ghordius

Ghordius JohnGaltUk Wed, 11/08/2017 - 10:07 Permalink

you are talking about a revolution, using words from a revolutionnope, Jo Cox was an elected member of the British Parliament, and the whole issue why she was on the street was a referendumnow, how do you want to paint her as a tyrant, who's blood is supposed to refresh the tree of liberty?again: a referendum is not a revolution

In reply to by JohnGaltUk

GreatUncle Ghordius Wed, 11/08/2017 - 09:46 Permalink

"Jo Cox attempted to sell me into slavery through BREMAIN (sneaky shits)". Now what should a person do?<--- slay the person to make them stop?<--- or accept slavery?Disgusting on whose part, the guy was a nutter short and sweet but no defence was made for him in court why not?Defending the constitution would have been a good start. So you make the choice ... go on write it down ... that all must bow down and kiss the feet of your EU appointed ones? When europe finally comes apart and it will I have already chosen my side on ideology alone.Also "this is my perspective" I disowned any of my extended family for the rest of my life if this is their concept of how I am to fucking live because I would need them in my life like I would need a hole in the head. I think one of them may have realised this and the others will do so very soon ... they will receive a letter stating I would prefer never meeting or talking to them again, best wishes and all that stuff bollocks... cunts now fuck off and die for what you attempted.The referendum did not solve that concept if anything it fucking revealed it in full.EITHER WE ARE ALL EQUAL OR WE ARE NOT AND IF NOT WE CAN FUCK ALL LAW RIGHT OUT OF HERE ... I need nothing more from the BREMAIN kind except their deaths thanks.People like you Ghordius makes me wish the EU would burn just to remove the deceptively crafted appointed abomination.

In reply to by Ghordius

Ghordius GreatUncle Wed, 11/08/2017 - 10:02 Permalink

"Jo Cox attempted to sell me into slavery"nope. Jo Cox was on the street trying to convince people to vote the way she thought it would be better for her countrythere is no slavery involved, no constitution involved, no disowning of families, no either we are equal or not, no nothingthere was a referendum coming up, and she was peacefully talking to people. about choices. about a vote

In reply to by GreatUncle

JohnGaltUk Ghordius Wed, 11/08/2017 - 12:32 Permalink

We live in a representitive democracy, I dont give a shit want that bitch wants. She should be interested in what WE the people wants. She represented an electorate that was 65% BREXIT so I dont give a shit was princess tipy toes thinks. She can keep her stinking views to herself and the champagne socialists she mixed with on the barge she lived in on the Thames.Remember that arse wipe Nick Clegg, went into an election promising no rise in Uni fees!!!! The first sniff of power and he sold out every student in the UK, thanks for your vote dickheads but I have to look after the guys that bought and paid my election expenses.

In reply to by Ghordius

Ghordius RSDallas Wed, 11/08/2017 - 09:01 Permalink

not possible. the UK is not a member of the eurozone. and the BoE does not qualify for membership of the eurozonethe eurozone is the other club. no, not the Schengen Agreement Area, that's another club, too. no, not nato, that's an even more different clubmeanwhile, there is only one body that could allow another... advisory referendum: the UK Parliamentit's the same body that could also retract the Art.50 notificationmeanwhile, just yesterday an American lady at dinner told me that she was amazed to find out that the US does not allow referenda at federal levelof course, at a polite dinner with her husband looking stricken and hoping the conversation does not go into politics you can only nod to such a thing. in fact, there is something in the US that resembles a referendum at federal level: a new Amendment to the Constitution. the process is similar if more complex, but 100% binding when once done

In reply to by RSDallas

JohnGaltUk Ghordius Wed, 11/08/2017 - 09:55 Permalink

When every US citizens has the right to own a firearm, you can choose to have a referrndum when ever you like.Most rational folks dont until they feel the pain, when the Rubicon has been crossed or that let them eat cake moment. It has happened frequently throughout human history, I guess our politicians should read more history and then we are not condemned of repeating the same mistakes from the past but then again they always think it will be different this time. Insanity is repeating the same action over and over and expecting a different outcome.

In reply to by Ghordius

bh2 Ghordius Wed, 11/08/2017 - 11:41 Permalink

The "American lady" is an ignorant wuss. Presumably another victim of the blighted public education system typically operating in North America.The federal charter only lends restricted powers of the states to the federal entity, which has no independent claim of sovereignty. (Because King Billy ceded his sovereignty solely to the people of the several then existing colonies.) The states are not merely territorial "sub-departments" of the central government, any more than are the several nations which comprise the UK.It would therefore be legally absurd that federal referenda could add, reduce, or otherwise amend constitutional powers which are itemized, limited in number, and restrictive of legislation.  The US isn't a "democracy" just because some French commentators apparently thought it was. The word "democracy" appears in no founding documents.A number of individual states do provide for referenda -- not least because they continue to be sovereign in all domains not specifically reserved to the federal government. 3/4 of the state legislatures can do away with the existing constitution and replace it as they collectively see fit. Just as they did when authorizing formation of this existing government as a replacement for the Articles of Confederation government which was the first after the Revolution. State legislatures would also have no obligation to form another collective "arrangement" -- precisely because they are the only ultimate sovereign powers.

In reply to by Ghordius

Crazy Or Not Sy Kloine Bee Wed, 11/08/2017 - 07:12 Permalink

>They won't do it.  They'll find an excuse to cancel Brexit. I wouldn't be so sure about that, elsewhere on ZH today we see European 0.6 growth on a diminishing trendline. I'm not sure I'm a fan of the logic of Brexit - I don't see where UK's export market growth will be if not with it's immediate neighbors (The ex-Empire/Commonwealth Nations have shown little signs of support to their former boss). Likely UK has decided it's principle export is arms, and is better off outside of EU ethic watchers and can compete more easily from there with French & German competitors? 

In reply to by Sy Kloine Bee

Endgame Napoleon Crazy Or Not Wed, 11/08/2017 - 08:12 Permalink

To many in Britain, the issue may be—as it is here—that there is an insufficient number of [real jobs] that actually cover a full range of household bills, and yet, hordes of welfare-boosted immigrants are gobbling up the part-time, low-wage, churn jobs because of unearned income from government for womb productivity that bridges the gap between low pay and living expenses. What do the bank jobs pay? In this country, only a handful of financial services jobs at the top pay enough to sustain an independent, modest lifestyle without unearned income from a spouse or the welfare/child-tax-credit racket.

In reply to by Crazy Or Not

earleflorida Sy Kloine Bee Wed, 11/08/2017 - 16:01 Permalink

London's 'Euromarket has grown from ~ $1.0 bln in 60's ; ~ $57 in the 70s ; ~ $1.1 Tln by 1983!'Maragret Thatchers 'Big Bang' reforms Autumn/1986'...--- (*Finance and Capitalist Market Systems are inseparable), and cuts restrictions on UK Financial Markets.    Period!Today Britain (City of London) hosts the world's biggest Int'l. Financial Center, with largest volume of Int'l. Loans, Foreign Exchange, and Dirivatives Trading.     (** think 'LIBOR')    ***Think Off-Shore Tax Shelters-- BIG TYME!!!Read Tony Norfield's book (c.2016) :  'The City'[of London]' ref:           http://www.vice.com/en_uk/article/av9yna/interview-tony-norfield-the-ci… and this interesting debate --- pros and cons of the 'Big Bang' :     www.debate.org/debates/Margaret-Thatchers-Policies-Benefited-Britain/1/           www.cps.org.uk/publications/big-bang-20-years-on-new-challanges-facing-… Ps.   All the Money's moving to Germany for financing Russia and China's new era--- location, location location?...---Can trade with asia, can trade north/ south america, and trade all day in europe.  America should be worried?!?

In reply to by Sy Kloine Bee

waspwench earleflorida Wed, 11/08/2017 - 16:05 Permalink

The banks are comfortably ensconced in London.   They are lightly regulated and can get away with much that would not be permitted in Europe.I do not think the banks want to leave London.   What they want is an end to May's shilly-shallying - as do we all.It is time for May to act decisively.   Thatcher would never have countenanced the nonesense from Brussells which remainer May tolerates.   If May won't do the job then she must be replaced.   May is not doing the job so she must be replaced.Britain must walk away, without any kind of negotiated settlement (the EU will never give us a decent deal anyway), and begin seriously working to re-establish ourselves as an independent, free, free-trading nation.   We can tighten out belts - stop paying Danegeld to the EU, and stop paying welfare benefits to foreigners for a start, and deport all those immigrants who are unemployed and not self-supporting.   It will be tough for a couple of years but it will be far less painful than continuing to waste our time on useless talks with Brussells.

In reply to by earleflorida

cherry picker Wed, 11/08/2017 - 06:01 Permalink

Who cares about banks?I don't.They can go to Puerto Rico, all of them, or the arctic.  When the bombs start falling the last thing a person thinks about is a stupid bank.

new game Wed, 11/08/2017 - 06:06 Permalink

"banks warn"spot on cherry pickerfuk the bankspuppet masters warn "we will fuk you for disrupting our euro control, how dare you plebs voice your contempt".now the the real shitsticks show up...

BritBob Wed, 11/08/2017 - 06:06 Permalink

 The Crazy EUMEPs and legal experts have claimed the veto over the territory’s future after Brexit would give Spain special status among EU nation, when they should be on an equal level.The EU’s Brexit negotiating guidelines stated that the Brexit deal will not apply to Gibraltar without an “agreement between the kingdom of Spain and the UK”.Experts have told the Telegraph that the veto could be illegal under EU law.Spain's Gibraltar claim has NO legitimacy and YES would be illegal.They've effectively signed the territory away 3x times!Gibraltar – Spanish Myths and Agreements (single page): https://www.academia.edu/34608739/Gibraltar_Spanish_Myths_and_Agreements

2banana Wed, 11/08/2017 - 06:18 Permalink

Banks?  They could care less about England. What England should do:Drop Corporate taxes to zeroFree trade agreements with Russia and AmericaExpel all 3rd world refugees back to the EUEnforce their borders Your move Brussels 

Ghordius 2banana Wed, 11/08/2017 - 09:38 Permalink

"Expel all 3rd world refugees back to the EU"there are zero 3rd world refugees in the UK from the EUwhat you might mean is people that somehow manage to get into containers even though the British check for them before they even come close to the UK borders, in France, note, before the tunnel starts. and they are usually found deadinterestingly, that special arrangement, a special courtesy of France, might also go away, together with all the Brexit stuff

In reply to by 2banana

Stu Elsample Wed, 11/08/2017 - 06:27 Permalink

Brexit will not happen because the disarmed and pussified peasants have no say in the matter. Real men armed with Stens and Spitfires saved Britain in the past. Very few real men with the right weapons exist in modern day BritainBritain is finished