There is nothing that can realistically be done to prevent banks shifting some of their business outside of the UK following the Brexit vote, a leading lobby group has said.
Allie Renison, head of Europe and trade policy at the Institute of Directors, told City A.M. it was "inevitable you were going to have some operations moving", as there is little reassurance government can extend to businesses before negotiations had begun and added that some banks had business lines which could not wait until the end of a lengthy negotiations for a decision to be made.
However, Renison noted there was "a lot more [government] could do to set out" what their priorities and thinking was going into the negotiations.
In a piece for the Observer, British Bankers' Association (BBA) boss Anthony Browne cautioned many banks could not move their business overnight so, without lack of clarity on what Brexit would look like, would be pushed to move their operations early and would do so on the basis that passporting would not be extended to them following the UK's departure from the EU.
Browne predicted some smaller banks might put their plans into action before Christmas, while larger players could move in the first quarter of next year.
"Businesses can't wait to the last minute," Browne wrote. "It takes years to move operations. Banks might hope for the best but have to plan for the worst."
Anthony Belchambers, chairman of the Honorary Advisory Council of the Financial Services Negotiation Forum, told City A.M. the comments highlighted the need for transitional arrangements to be put in place.
Belchambers added: "Requiring people to spend large sums of money to restructure on a best guess seems, to me, we'll need to think this one through again."
However, Browne also noted in his letter that "London will survive as a global financial centre".
Meanwhile, some of the smaller challenger banks, whose business models do not depend so heavily on passporting as their incumbent peers, have already written to the influential Treasury Select Committee to urge them to use Brexit as an opportunity to tear down some of the red tape which has burdened their businesses.
Paul Lynam, chief executive at Secure Trust Bank, told City A.M. that, while the UK "can't really afford to be losing high tax-paying" businesses in the way Browne had warned, Brexit continued to present a chance to get rid of some of the industry's regulation stemming from the EU and to correct the "uneven playing field" in banking.