Top bankers are confident that British Prime Minister Theresa May’s government will support a transition period of several years for the financial sector to cope with the UK’s exit from the EU.
May on Thursday met the heads of major US financial firms at the World Economic Forum in Davos, Switzerland, to discuss their concerns.
May on Tuesday confirmed that Britain would quit the single market when it exits the union, although she said she would back an “implementation” period.
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Financial firms have accepted that they will lose their “passporting” rights to freely sell services across the 28-nation bloc after Brexit, but want more time to adapt to whatever terms are agreed with the EU.
“I think the government does [support it] because I think they understand the complexity of this,” Barclays PLC chairman John McFarlane, who is also chair of financial industry lobby group TheCityUK, told Reuters earlier on Thursday.
A source familiar with the talks in Davos, which included executives from Goldman Sachs Group Inc and Morgan Stanley, said May had been receptive to their points on transition.
“All the banks want a multiyear agreement. She seemed to understand that. They talked about changing the name from ‘transitional’ arrangement to something that was less open for negotiation,” the source said.
British Secretary of State for Exiting the EU David Davis on Wednesday said companies would have a maximum of a two-year transitional deal to help smooth Britain’s exit from the EU after 2019, although May on Tuesday said the length of any such deal may vary for different industries.
That could fit with what British bankers are calling for.
“We want a standstill arrangement for three years, that would kick in after the government’s negotiations on Brexit are finalized,” McFarlane said.
Bank of America Corp chief executive Brian Moynihan told Reuters that May had made it clear in her speech on Tuesday that she wanted to get Brexit right by allowing enough time for implementation, adding that banks now need to persuade the EU that economic growth could be at stake without a transition.
“We as an industry have got to get that message across because you don’t want to disrupt the economies that are now starting to grow a little bit; you don’t want to disrupt the free flow of capital; you don’t want to disrupt people’s lives,” Moynihan said.
Meanwhile, international and British banks, insurers and asset managers are seeking a bespoke deal with Europe that would give “mutual recognition” to as many of their products and services as possible, McFarlane said.
JPMorgan Chase & Co chief executive Jamie Dimon on Wednesday said that “it looks like there will be more job movement than we hoped for,” while Lloyds Banking Group PLC, Britain’s largest mortgage lender, is set to choose Frankfurt as its base for guaranteeing ties to the EU, according to a person familiar with the matter.
And while UBS Group AG and HSBC Holdings PLC, two of Europe’s biggest banks, said that they could each move about 1,000 jobs out of London, Barclays will keep the bulk of its activities in Britain after Brexit, its chief executive Jes Staley told the BBC on Thursday.
Additional reporting by Bloomberg
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