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Bank chief warns of lost City jobs unless access to EU markets is assured

Published 03/10/2016

Citi's UK boss James Bardrick warned some banks would have to reduce their size in Britain
Citi's UK boss James Bardrick warned some banks would have to reduce their size in Britain

Jobs from the City could be lost to the continent unless the financial sector can be assured of continued access to vital European Union markets, a bank chief has warned.

Citi's UK boss James Bardrick warned some banks would have to reduce their size in Britain and move staff and activities across the Channel without guarantees about their ability to operate in the remaining 27 EU nations after Brexit.

Under passporting rules, financial institutions set up in the UK are able to operate in other EU states.

Unless those rules are allowed to continue, or an equivalence regime is established, City institutions face the prospect of losing their ability to operate fully in the remaining EU states.

At a Conservative Party conference fringe event in Birmingham, Mr Bardrick said banks would be reluctant to move from London because of the efficient operations and talented staff they have in the capital - but it would depend on the ability to operate.

And some firms may move staff to remaining EU members in order to hedge against future changes.

He said: "If the rules allow them, in the new relationship, to continue operating, I think many would be very pleased to do that. They may, for reasons of risk management - and having been reminded that things can and do change - want to have a more balanced model.

"It is unlikely that you would see such a high concentration in the UK to serve the whole of a region when the UK is not part of that economic region, not least because I think the EU countries will want to encourage and will take action to try and make people do that.

"In our case, and I can only really speak for ourselves, but I think people will think about it in the same way, there are significant costs of us changing and fragmenting the way we do business, it's quite efficient as it is."

Mr Bardrick acknowledged there were some "difficult trade-offs" in the negotiations the Government would have, particularly if the EU's freedoms - including the freedom of movement - were involved.

"The ideal, narrow analysis would be, we can guarantee good provision of uninterrupted service if we retain passports.

"But if the deal that is needed to do to retain passports is contrary to the effective will of the people around some of the other freedoms, then we all recognise the difficulty of that. But that's not for us to decide."

He added: "If there are movements away from that and you don't have full access to the single market then there are things that you just cannot do from London under EU rules which would remain in the other EU 27 countries.

"That would mean that people would have to move people and roles and responsibilities and some infrastructure across the Channel.

"We are very well distributed, more than half of our people at Citi already work outside the UK. That isn't typical.

"But for a lot of people who are highly concentrated they would have to reduce."

Former minister Dominic Raab, a prominent Brexit campaigner, said the UK could look to continue passporting arrangements or an equivalence regime and warned that any attempts to restrict the City would ultimately hurt the remaining EU members.

The UK was the world's leading financial centre and "t here isn't an EU financial centre in the top 10".

He said: "Don't get me wrong, these issues need to be handled very carefully, but I don't see a cliff edge for the City.

"I think it will stay the global leader."

Referring to the remaining 27 EU members, he added: "Given the nature of our deficit, they can behave in a way which is irrational and political, as opposed to rational and serving their own economic interests, but it hurts them more than it hurts us."

In an indication of the need for clarity Mr Bardrick said banks already had customers asking them for assurances that they would still be able to provide existing services and capabilities "in one year, three years, five years".

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