The group chairman of HSBC has today warned more clarity is needed on Brexit to prevent firms, including his own, collectively moving thousands of jobs out of London preemptively.
In an almost three-hour grilling with the Treasury Select Committee, Douglas Flint cautioned the lack of coherent guidance on where the government intended to go with Brexit "would lead to people thinking earlier as to where to move jobs".
He noted his own bank could move jobs preemptively before the end of the Article 50 process if it looked like the Brexit deal might damage its current business.
HSBC said in February last year, long before the Leave decision was known, it could move up to 1,000 investment banking jobs to Paris, depending on what the Brexit deal secured on passporting rights.
Flint added today that the bank was also considering its options in Ireland and the Netherlands.
Flint today added that, while he understood "the complexity of the politics", the government providing reassurance it understood the need for a transition period, along with guidance on what its ambitions for Brexit actually were, would help put businesses' minds at rest.
When questioned on claims made last year by head of the British Bankers' Association Anthony Browne, that banks had their hands "quivering over the relocation button", Flint remarked the relevance of this statement depended on the structure of individual institutions and their current level of presence in the EU.
"Nobody wants to push the button," Flint added. "The best outcome for everybody is the preservation of the status quo insofar as possible."
Speaking alongside Flint, chief executive of the London Stock Exchange Xavier Rolet said customers were already chasing firms for more clarity on how they planned to continue serving clients, particularly around the area of euro clearing.
Backing Flint's call for more clarity, Rolet said: "The decisions would be made by our customers and without a clear path [on how our clearing business will operate]… our customers simply would not wait for that outcome to materialise."
Both Flint and Rolet warned lack of passporting post-Brexit would put numerous jobs on the line, particularly from US banks who had opted to establish in London partly to take advantage of this body of rights.
While noting he would only be able to guess at the exact number of jobs which had been set up in London because of such thinking, Flint noted "it would be tens of thousands".
Rolet also warned that as many as tens of thousands of jobs could be on the line if the UK lost rights to euro clearing, as a large number of ancillary services could be forced to move alongside the main business.
A report released by EY last November, which was commissioned by the London Stock Exchange, warned that more than 200,000 jobs would be lost across the UK if the country lost rights over euro clearing.
Meanwhile, Elizabeth Corley, vice chair of Allianz Global Investors, called for a robust grandfathering procedure – in which EU laws are transposed into the UK – to make sure there were no unintended hiccups throughout the Brexit implementation period.
"It is the level of detail that can trip you up," she added.
Rolet stated that he thought a five-year grandfathering period from triggering Article 50 would be needed, while Flint called for a two- or three-year period following the end of the Article 50 process.
When asked about the government's understanding of what the sector needed from the Brexit deal, Flint said: "They have grown in their understanding and knowledge."
However, he added the industry was still trying to answer the question of "are there individual pieces that don't look particularly important but are critical [to how the financial ecosystem works] today".
Last October, City A.M. reported the City had been getting the cold shoulder from the Brexit department on its interests during the upcoming negotiations.
Commenting after the hearing had finished, chair of the Committee Andrew Tyrie said:
The unanimity among these leading City figures – about the need for a three-year 'standstill' at the end of the Article 50 process – is significant. They argued that without such an arrangement, major banks and other financial services firms will take preemptive action at a cost, perhaps large, to the sector and the wider economy.