Finance
UBS chooses Frankfurt for post-Brexit EU base, CEO Ermotti says
-
UBS CEO Sergio Ermotti said that the bank has chosen
Frankfurt for its post-Brexit EU headquarters. -
“The financial system is already operating on the
assumption that there is no agreement,” he told
Bloomberg. -
Major financial institutions are in the process of
choosing new EU hubs to mitigate the impact of Britain leaving
the bloc. -
Most non-EU institutions currently have their EU bases
in London.
Switzerland’s largest bank, UBS, has chosen German financial hub
Frankfurt as its new EU headquarters as it puts in place
contingency plans for the possibility of a no deal Brexit,
its CEO said on Monday.
Speaking to Bloomberg TV, UBS boss Sergio Ermotti said that the
bank’s preparations for a disorderly Brexit have led it to choose
Frankfurt as the base for future EU operations once Britain has
left the EU.
Ermotti told Bloomberg that while Frankfurt will be UBS’ main
hub, it will carry out what he described as a “multi-location
strategy,” doing business from offices in Paris, Milan, and
Madrid.
“The financial system is already operating on the assumption that
there is no agreement,” he said, referring to a no deal Brexit in
which the UK falls out of the EU without any concrete
arrangements.
“Whatever is going to happen from now onwards, it’s not going to
make the exercise less expensive,” he added. UBS has previously
said that it expects Brexit contingency planning to cost around
$100 million.
Major financial organisations are being forced to rethink their
European strategies as a result of Brexit and the coming end to
financial passporting arrangements.
Passporting rules allow finance companies to sell their services
across the 28-member bloc with just one local license, rather
than getting a license to operate in each member country where it
does business. It is tightly tied to membership of the EU single
market and will be lost once the UK falls out of the EU.
Ermotti did not give an indication of the number of staff UBS
expects to shift out of the UK, although in recent weeks several
senior bankers have said that
the number of people being moved out of London post-Brexit will
be much smaller than initially expected.
Last week, executives from Citi and Barclays Ireland told UK MPs
serving on Parliament’s Treasury Select Committee that each bank
currently expects to move only around 150 roles out of Britain
due to Brexit. An executive from JPMorgan said the bank expects
to move hundreds of roles.
In the early stages of Brexit planning, numerous lenders warned
that thousands of jobs could be relocated, but it now appears
that such predictions were overzealous.
Ermotti also said that while there is likely to be a significant
economic impact from Brexit, suggestions it could cause a major
downturn are likely incorrect.
“I don’t believe Brexit can be a trigger for a financial crisis
or a banking crisis. But it could undermine investments, and
trigger maybe a slowdown in the economy,” he said.
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