Q&A: Who is going where now Article 50 has been triggered? What's been said so far and what's likely still to come?

 
Hayley Kirton
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Onto pastures new? Lloyd's of London announced this morning it had picked Brussels as an EU post-Brexit base (Source: Getty)

Article 50 has been triggered and Brexit is officially underway, so what does that mean for the state of the City? Here's everything we know so far:

What has happened today?

Two big City names confirmed today they will be setting up a new base inside one of the remaining EU member states. Insurance market Lloyd's of London revealed it would be establishing a hub in Brussels, which would be up and running by 2019.

Meanwhile, Royal London announced it would be opting for Ireland for its EU base. The life insurance, pensions and investment firm plans to convert a subsidiary it already has there into a domiciled business.

Why are they moving?

Even before the Leave vote was announced, many in the financial industry warned Brexit could spell the end of the valuable access rights that allow them to do business in other EU and EEA states, such as passporting.

As a result, firms have been busily mulling how they will need to rejig their business structure to make sure they can continue to serve their clients.

"It is important that we are able to provide the market and customers with an effective solution that means business can carry on without interruption when the UK leaves the EU," Lloyd’s chief executive Inga Beale said.

What are other insurers doing?

It's a bit of a mixed bag. Many insurance companies already have regulated offices scattered throughout the EU, so will still have a base in the bloc when the two-year Article 50 clock runs out. However, whether they will keep all their current staff in London or ask some people if they'd perhaps like to try life in Paris or Dublin remains to be seen.

Other insurers have been turning their focus away from the EU in recent years anyway, either to become a UK-orientated business or to try their hand at business across the Atlantic, and therefore may be less fussed about maintaining access to the Single Market.

What about the banks?

Like the insurers, the banks are a bit mixed too. Of the UK lenders, HSBC has confirmed it is considering moving some of its London staff to its operations in Paris while Lloyds has said it is thinking about turning its Berlin branch into a subsidiary.

The position is less clear at Barclays and RBS. Barclays has been reported to be looking at Dublin as a possible EU headquarters post-Brexit, but chief executive Jes Staley has also said his firm is a British bank which is "committed to the United Kingdom".

Meanwhile, RBS is understood not to have made any final decisions on Brexit moves.

The position is also unclear among the Wall Street lenders who have settled down in London, as many seem to still be weighing up their options. It was reported this morning that JP Morgan had been looking at office space in Dublin for up to 1,000 staff, but it is understood the bank is still looking at a number of EU cities.

Meanwhile, Goldman Sachs International's chief executive Richard Gnodde recently announced it would be upgrading its facilities in Germany and France, where the bank is already licenced, to get ready for Brexit.

What does it mean for jobs?

It's potentially not as bad as once feared. A report published by Oliver Wyman on behalf of think tank TheCityUK last October speculated as many as 75,000 jobs in the UK could be on the chopping block should the government opt for a so-called hard Brexit.

However, many firms who have announced or hinted that jobs will be lost in London have pointed towards much more conservative figures. Lloyd's the insurance market said today the number of employees in its new Belgium base would be "in the tens", while Lloyds the bank has said no jobs will move because of its Brexit plans.

That being said, there are others who have suggested larger chunks of their UK job numbers will need to be moved overseas. Execs from both UBS and HSBC have previously said as many as 1,000 of their jobs will need to be relocated.

When will firms start to move away?

Sooner than you might otherwise think and, in many cases, possibly before Brexit is even official.

Chairman of Swiss bank UBS Axel Weber indicated earlier this month his firm might start making moves before the end of the two-year Article 50 process, suggesting the timeframe would be too tight for them to get their house in order.

Meanwhile, Gnodde said last week Goldman Sachs planned to get the ball rolling on its contingency plans before day one of Brexit. He added job shifts were likely to be in the hundreds in first instance and would be a combination of hiring new bankers in locations other than London as well as moving roles from the UK offices.

What does it mean for the Treasury?

The moves could be a blow for the UK's tax take, as shifting operations outside of the UK may well also mean, details depending, they are also outside the UK's tax laws. The Oliver Wyman report found a hard Brexit could lead to up to £38bn in lost revenue.

How is the European Central Bank (ECB) reacting?

Any lenders who were hoping they could just hang their sign over a doorway and call that their new EU legal home could be in for a nasty surprise. ECB supervisor Sabine Lautenschlaeger warned earlier this month she thought the central bank would be unlikely to dish out licences to "empty shell" operations.

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