Brexit: Dublin is set to gain big time as banks relocate from UK, will FinTech be a winner or loser?

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It has been reported that many of the top investment banks will begin the process of moving some London-based operations into new hubs inside the European Union within weeks after UK Prime Minister Theresa May triggers the formal process for leaving the EU on 29th March 2017.

Dublin and Frankfurt are likely to benefit hugely by the UK leaving the EU. Bank of America, Standard Chartered Plc and Barclays Plc are reported to be considering Ireland’s capital for their main EU base to ensure continued access to the single market, Goldman Sachs Group Inc. and Citigroup are among banks eyeing Frankfurt, others have reported.

With banks anticipating a “hard Brexit” and the resulting loss of their ability to sell services freely across the EU from London, top executives apparently want to have new or expanded offices up and running inside the EU before the U.K. departs in 2019. Frankfurt is a natural option given a very well established financial ecosystem featuring Deutsche Bank, the European Central Bank and BaFin. Dublin shares similar laws and regulations as the UK and is the only other English-speaking country in the EU, so would naturally make sense for ease of transition in terms of relocating staff, operations and ease of transition.

What this will mean for the FinTech industry is anyones guess, in many ways it may actually be a positive thing for the Disruptive Startups only focussed on the UK market given that they may benefit as the Big Banks are distracted with the complexity of relocation and may well temporarily neglect the UK market, given the uncertainty.

If the elite of the banking world flood into Ireland with new EU HQ’s it may well be a great opportunity for FinTech Startups in Ireland to get investment and partnerships, at the very least it looks like the Irish economy is set to gain big time as new jobs are sure to be created both in the Financial industry and also other industries sure to benefit such as property, construction and the legal industry, when I was in Dublin for Dublin Tech Summit, 1500 new tech jobs were announced, so perhaps by next years summit we will be seeing a huge amount of Tech jobs announced within the Tech industry in Ireland.

I mentor dozens of tech startup founders and many have expressed to me that they find it very frustrating when the big banks, decide they suddenly need 150 new London based software engineers, which means the already limited pool of technical talent gets even harder to compete in to attract and retain talent as wages increase dramatically, meaning many startups have no choice but to outsource overseas on a contractual basis, which isn’t always ideal, given the agile fast paced nature of startups who more often than not you need to change course often, plus trust and security concerns. So the tech startup world may well not miss the big banks should they decide to relocate their technical teams away from the UK, although this is a double edged sword as the uncertainty is likely to create issues for them with fundraising.

Theresa May will file divorce papers to leave the EU on March 29, launching two years of complex negotiations that will pit the UK’s need for a trade deal against the EU’s view that Britain shouldn’t benefit from Brexit.

London could be set to lose 10k banking jobs and 20k roles in other financial services as clients move 1.8 trillion euros ($1.9 trillion) of assets out of the UK after Brexit, according to think tank Bruegel. Other estimates range from as much as 232k jobs to as few as 4k. Bloomberg recently conducted interviews and reviewed public statements to discover what each major bank is likely to be planning.

Bank of America

Bank of America views Dublin as its default destination for a new EU hub if the U.K. loses easy access to the single market, one of the firm’s top executives in Germany said earlier this month.

The bank will likely move some jobs to other cities across the region, including Frankfurt, Madrid, Luxembourg and Amsterdam, said Nikolaus Naerger, Bank of America’s head of corporate banking in Germany, Switzerland and Austria. No final decisions have been made.

“You’ve got to get your legal entity structure correct so you can operate in two different environments: one inside the U.K. and one outside,” Bank of America President Brian Moynihan said in Davos, Switzerland, in January. “We already have a lot of that structure set up. Then you have to start to think about where locations are.”

Goldman Sachs

The Wall Street firm is considering making Frankfurt its hub inside the EU and could move as many as 1,000 employees, including traders and senior managers, according to a person familiar with the matter. Chief Executive Officer Lloyd Blankfein has publicly said the bank has shelved plans to move more key operations to the U.K.

“We were on track to move more and more of our global activities, so global ops, global tech — all those things made more and more sense to operate out of the U.K.,” because of the time zone, Blankfein said in a Bloomberg interview in Davos. “Now, we’re slowing down that decision, and only moving there what we have to move there. We don’t value doing things twice; moving them there and then moving them away from there.”

JPMorgan

JPMorgan Chase & Co. has scouted for office space in both Dublin and Frankfurt, people with knowledge of the matter said this month. Before the referendum, CEO Jamie Dimon said as many as 4,000 of its 16,000 U.K. employees could be moved to the continent after Brexit.

“We have to accommodate the laws of the land in both Britain and the EU, and that will determine how many jobs and how many people you have to move,” Dimon said in January. “It looks like there will be more job movement than we hoped for.”

UBS

Chairman Axel Weber said this month that the bank will make a final decision on whether to move as many as 1,500 of about 5,000 U.K. investment banking staff soon after Brexit is triggered.

“Yes, we will have to move bankers — we have an SE in Frankfurt, we have an appropriate setup in Spain,” Andrea Orcel, head of UBS Group AG’s investment bank, said in Davos, referring to the Swiss bank’s German subsidiary, which is licensed to do investment banking. “We still have flexibility to decide where to go, but we will definitely have to move.”

HSBC

HSBC Holdings Plc CEO Stuart Gulliver said in January that staff generating about 20 percent of its London investment-banking revenue may move to Paris, where it acquired a French commercial bank more than a decade ago. “Activities specifically covered by EU legislation will move,” he said.

Before the June referendum, Gulliver said a Brexit vote would likely result in about 1,000 of the bank’s 5,000 London-based staff relocating to the French capital.

Barclays

The U.K. bank has settled on Dublin for its main hub inside the EU and is planning to add about 150 staff there, people with knowledge of the decision said earlier this year.

Barclays CEO Jes Staley has struck a different tone to other bank bosses. He said in Davos that it would be “very difficult” to dislodge a financial center like London. If needed, Barclays may reassign its Frankfurt branch to its Irish subsidiary, he said.

“Same people, same traders, you have to book a trade in Ireland as opposed to London, but that’s not a wholesale move of our capability from London to Ireland,” he said.

Standard Chartered

The bank approached Irish officials about making Dublin its legal base inside the EU, people familiar with the discussions said in December. No final decision has been taken, and the firm is also in talks with Germany’s regulator about choosing Frankfurt.

Citigroup

Citigroup is evaluating locations for parts of its London broker-dealer business, including Ireland, Spain, Italy, Germany, France, and the Netherlands, Jim Cowles, the bank’s top executive for Europe, the Middle East and Africa, said at a conference in Dublin on Jan. 24. Cowles said he expected the bank would make a final decision by the end of the first half.

Bloomberg News reported in November that the firm was in discussions with BaFin about moving some of its London-based equity and interest-rate derivatives traders to Frankfurt. Citigroup is also in discussions with the ECB and regulators in EU nations including Ireland about relocating other parts of its operations.

Morgan Stanley

Morgan Stanley is scouting for office space in Frankfurt and Dublin for their enlarged EU hub, people with knowledge the matter said in February. The bank may initially move about 300 workers to one of the cities.

Before the vote, Bloomberg News reported that the firm would likely move 1,000 of about 6,000 U.K. employees out of the country in the event of Brexit. Morgan Stanley President Colm Kelleher said the firm would likely move its local headquarters to Dublin or Frankfurt.

Morgan Stanley executives said New York would likely be the big winner from Brexit as U.S. firms would probably allocate headcount away from Europe altogether.

Daiwa

Daiwa Securities Group Inc. CEO Takashi Hibino said the Japanese brokerage is considering Frankfurt and Dublin among candidate cities to host European operations it moves out of London. The firm, the majority of whose 450 European staff work in London, has yet to establish a licensed entity in the EU, and is running simulations with consultants.

Lloyds Banking Group

The U.K. bank plans to convert its Berlin branch into a subsidiary, making that its base inside the EU, a person with knowledge of the matter said last month. A small number of people would move from London. The bank has yet to apply for an extension of its German banking licence.

Credit Suisse

Credit Suisse is exploring options for expanding in Dublin after Brexit, two people with knowledge of their plans said in January. Chief Financial Officer David Mathers said in February that losing access to the EU would endanger 10 percent to 15 percent of income at its two U.K. subsidiaries, which have a revenue base of $4 billion to $5 billion.

Bank of China

Bank of China Ltd. is in talks with Irish officials about potentially moving some of its U.K. operations to the country after Brexit, Ireland’s Sunday Independent newspaper reported in January.

Sumitomo Mitsui

Sumitomo Mitsui Financial Group Inc. is also eyeing moving some of its U.K. employees to Ireland and has held a series of meetings with local regulators, the Sunday Independent reported.

Mitsubishi UFJ

Japan’s biggest bank is increasing the size of its Amsterdam office, though the lender has yet to decide on where to base its securities operation after Brexit, Bloomberg reported earlier this month.

Mizuho

Mizuho Financial Group Inc. is considering Amsterdam and Dublin among potential locations to base its brokerage unit if it’s impacted by a “heavy Brexit,” President Yasuhiro Sato said in January. Mizuho changed the name of its Netherlands unit to Mizuho Bank Europe on Jan. 1, reflecting its role as a subsidiary overseeing a number of countries in the region, including Belgium, Austria and Spain.

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