The Mayor of London has vowed to fight for the City's access to Europe's single market, including vital rights estimated to be worth billions to UK-based institutions.
Sadiq Khan last night told City A.M. the loss of passporting – the system that allows UK-regulated banks to operate across the European Union – would be “a disaster”.
He was joined by the City of London Corporation, which said that passporting was worth up to £10bn to the City.
Their pledges follow a warning over the weekend from Bank of France governor Francois Villeroy de Galhau, who said that UK banks would be unable to use the passport system without the government signing up to all the rules of the single market.
Speaking to City A.M., Khan said it would be “foolish” not to act to protect London's reputation as the best place for banks to do business.
"While I respect the country's decision to vote to leave the EU, my job as mayor is now to stand up for and protect the interests of London, and that includes the financial sector,” he added.
"I'm assembling a priority list of what London demands from any exit negotiations and passporting rights, access to the single market and visas are right at the very top of this list.
City of London Corporation policy chairman Mark Boleat said: "The government should now engage in a period of consultation with representatives of the financial, professional and business services industry to ensure we can both protect and keep creating jobs both in London and throughout the country.
Speaking on French radio over the weekend, Villeroy de Galhau said it would be impossible to preserve passporting if the UK leaves the single market for goods and services.
"If tomorrow, Britain is not part of the internal market, the City cannot keep its European passport," he said.
Clifford Chance regulatory partner Simon Gleeson said that, in order to maintain access to the single market, the UK would have to sign up to freedom of movement and the adoption of present and forthcoming laws.
Without that, he said, banks will have to relocate some middle and back office roles to Europe, adding many institutions will already be under pressure from clients to demonstrate plans to continue providing services.
"That probably doesn't allow them to maintain a wait and see posture for any extended period. Thus we expect banks to execute restructuring fairly soon based on 'worst case' analysis of the possible outcomes of the exit negotiations," Gleeson added.