Since the Brexit referendum that took place in the United Kingdom last year, European banks have already withdrawn from the UK as much as 350 billion euros. That’s reported to be the official stats provided by the European Union, The Financial Times reports.
In particular, the British assets belonging to European banks shrank from 1,94 trillion euros all the way down to 1,59 trillion euros over the reporting period. That’s -17%. At the same time, their liabilities shrank from 1,67 trillion euros all the way down to 1,34 trillion euros.
Experts believe this is going to last until March 2019 when London is supposed to official divorce with the EU. Apparently, those European banks are afraid of potential losses caused by the Brexit. According to the recent survey conducted by the EBA, more than 30% of the interviewed European bankers assume that the uncertainty around the Brexit (and the possible legal changes that may follow it) is the key point of concern today. If there are some changes to the legal side of the matter, especially when it comes to regulating financial contracts, they may end up causing problems with securing data and executing court decisions. So, they think that a standalone agreement between London and Brussels is needed to avoid this kind of issues further down the road.
In the meantime, not only are foreign banks withdrawing their capital from the UK, they are also moving their offices to other European states. JP Morgan Chase, one of the biggest investment banks in the world is one of them. Reuters reports that the American bank has already rented offices in the Taunusturm skyscraper in Frankfurt, Germany. By the way, this is believed to be another financial capital of Europe along with London. The bank is also planning to open offices in Dublin and Luxembourg.
It is reported that the decision to quit London came as the result of the talks between JP Morgan Chase CEO Jamie Dimon and UK Prime Minister Theresa May. Moreover, some of the British financial institutions are now thinking of moving the EU to keep rendering services to European clients. The ECB promised support and licenses to those willing to move to the Eurozone.
