- By Oliver Jankovic
Regulators say financial companies and banks have already conducted due diligence to move operations to the French capital
London has long since been the financial and banking capital of the world, with financial services being the hyper-city’s largest global export.
However London is also the most expensive city in the world to live and the third most expensive city in which to conduct business behind only Zurich and Geneva.
Brexit means that this price premium for living and working in London is no longer an attractive prospect for many global big business leaders, and indeed many SMEs.
Leading banks are in advanced stages of planning their shift of operations away from London and into Paris amid the Brexit crisis, France’s top stock market regulator has said.
Benoit de Juvigny, secretary general of Autorite des Marches Financiers (AMF), told the BBC that “large international banks” based in London have already conducted all of the necessary due diligence to move operations to the French capital.
Juvigny explained that the French regulatory department will likely be expanded to handle the potential influx of companies.
A so-called “hard Brexit” would likely mean the loss of passport rights for British financial institutions, which allow banks based in the UK to offer services to companies and governments across the European Union without restrictions. Brexit would therefore completely restrict all London financial institutions to only being able to serve clients within the UK itself, effectively ending the British financial industry and ruining London’s main economy.
There are fears that Brexit is leading to an exodus of banks from London to other European cities.
The BBC says at least eight financial centres across Europe are actively wooing companies based in London. Paris, Frankfurt, Dublin, Luxembourg, Amsterdam, Madrid, Bratislava and Valletta are all bidding to become the new stage for global finance.
Juvigny warned of the dangers of national regulators competing with each other to attract business, saying this could lead to leniency and lax regulation that could trigger another financial crisis.
“The danger is the race that we could have for a more lenient regulation with a more lenient regulator”
Citigroup is reported to be among the international institutions considering moving a large portion of its operations from London to Frankfurt.
Citing sources, the Independent said the US company was already holding talks with the German financial regulator BaFin about getting the necessary approvals.
“We are evaluating our options as negotiations between the EU and UK continue” Edwina Frawley-Gangahar, a Citigroup spokeswoman, was quoted as saying.
“Considerable uncertainty remains over the nature of the UK’s eventual exit from the EU, and therefore we have not taken any decisions at this point. London is, and will remain, our EMEA headquarters and a global hub for many of our businesses.”
Fears over national bankruptcy and the collapse of the London economy post Brexit have sparked a parliamentary rebellion with at least 90 MPs vowing to do everything in their power to block Brexit from taking place at all.
PM Theresa May is insistent that Brexit will continue at any cost. Despite the overwhelming financial damage this summer’s referendum vote has already caused to the British economy and quality of life.
The debate now lies in whether to blindly follow the none legally binding vote of a tiny majority victory referendum where the vast majority of Brexit voters where over the working age anyway. Or to ignore the vote and do what is right for the safety and well being of the public and nation.
Since the referendum debt levels, unemployment figures, violent and racially aggravated crime and corruption have all seen record new levels across the UK.
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