Banking experts have identified an unexpected reason why big banks could keep major operations in London following Brexit – the capital's high numbers of top quality compliance staff.
Bosses at HSBC and UBS said last week they could move thousands of staff out of London due to Brexit, triggering worries the UK could lose its dominance of the sector. However, City A.M. has been told London's vibrant financial ecosystem, including an army of red tape warriors, could act as a lure for those thinking of shifting overseas.
"You find in London all the skills you want," said Serge Ekue, who was appointed late last year as senior country manager in the UK and head of global markets for EMEA for French bank Natixis. "As just one example...if you want to recruit a compliance officer, this is the place to be."
Regulators have been churning out new rules at a remarkable pace ever since the financial crisis, and watchdogs have been clamping down with increasing vigour.
This has left compliance staff in high demand. Figures recently released by recruitment consultant Robert Walters forecast that salaries for mid-tier compliance staff will rise by six per cent in 2017.
The UK's wider legal and regulatory offering, not just its talent pool, is another a big plus point for the City's status as a financial capital according to Conrad Ford, chief executive of Funding Options who spent a substantial chunk of his early career in banking.
"It's the entire ecosystem around compliance that makes it so formidable," Ford said.
"Clearly the regulatory environment and the fact that there is a big talent pool was and is an attraction of London," agreed one City source.
Andrew Gray, global financial services Brexit leader for PwC, told City A.M.: "It's fair to say that the breadth and depth of activity, especially in the wholesale end of the [banking] market, is on a scale in London that isn't replicated elsewhere...if you are seeking to recruit people who have got experience, you are going to have a deeper talent pool and more experience than other places."
However, one banking source cautioned it would be "overstating it" to say the quality of the compliance staff would be a critical factor for firms, adding: "London is an important pool of talent but it is not going to keep firms there if regulatory or economic factors require them to move."