Goldman Sachs Group Inc is considering shifting some of its assets and operations from London to Frankfurt, three people familiar with the matter said, as it tries to secure access to the EU market when Britain leaves the bloc.
The US investment bank is examining the step as a way to qualify for supervision by the European Central Bank (ECB), putting some of its operations under the watch of the eurozone’s main banking supervisor.
Coming under the ECB’s jurisdiction should allow it to continue selling its services to clients across the eurozone and wider EU post-Brexit, according to one person with knowledge of the matter.
However, this is uncharted legal territory and the sources said Goldman had not yet taken any decision on the matter.
“Moving under ECB supervision in Frankfurt is one of the options the bank is considering,” one of the people said.
Another said Goldman had held talks about such a step with ECB officials in Frankfurt.
The plans being examined would shift Goldman’s European presence toward the center of the eurozone, representing a blow to London’s status as a global financial center — and a coup for Frankfurt.
A spokesman for Goldman Sachs said there were “numerous uncertainties” about the outcome of Brexit negotiations.
“We continue to work through all possible implications of the Brexit vote,” he said. “We have not taken any decisions as to what our eventual response will be.”
Goldman currently relies on the EU’s “passporting” system.
This allows it to sell across the region without setting up shop in each member state, while under the supervision of UK authorities.
However, banks’ UK operations are expected to lose their passporting rights after Brexit.
A bank such as Goldman Sachs would typically qualify for ECB supervision if it increased the assets of its eurozone operations to 30 billion euros (US$32.57 billion).
Goldman Sachs AG in Germany had assets of 551 million euros last year, according to filings for last year.
However, the bank’s overall assets in other entities in Germany and the rest of the eurozone are higher, according to the bank.
Goldman is keeping a floor vacant at its high-rise offices in Frankfurt which could accommodate any additional staff, one of the sources said.
The bank’s Frankfurt office, which is focused on dealmaking and selling securities in Europe’s biggest economy, is its largest European operation outside London. The bank also has smaller offices in other European cities including Paris, Madrid and Milan, providing similar services.
Goldman Sachs’ assets in Germany are small compared with the about US$850 billion of assets of Goldman Sachs in London. London is the bank’s headquarters for its operations in Europe, the Middle East and Africa.
Even were Goldman Sachs in Frankfurt to come under ECB supervision, its business in London would still answer to UK regulators.
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