
After ‘Brexit,’ Finding a New London for the Financial World to Call Home - edward
http://www.nytimes.com/2016/07/01/business/after-brexit-finding-a-new-london-for-the-financial-world-to-call-home.html
======
randomname2
Some banks are already backtracking on their promises of leaving London for
Paris or Frankfurt [1] [2].

[1] [http://www.ft.com/fastft/2016/06/30/hsbc-rules-out-
leaving-l...](http://www.ft.com/fastft/2016/06/30/hsbc-rules-out-leaving-
london-after-brexit-vote/)

[2] [http://www.independent.co.uk/news/business/news/hsbc-
headqua...](http://www.independent.co.uk/news/business/news/hsbc-headquarters-
london-flint-brexit-eu-referendum-passporting-a7111236.html)

~~~
simonh
They are not backtracking, HSBC have never said they would move their HQ out
of London. Since 2/3 of their business is in Asia it doesn't make as much
difference if London is in the EU or not compared to many other banks.

What HSBC have said is that they may move about 1,000 jobs to Paris. That's
because those jobs are tied to services that by law must be provided within
the EU legal and regulatory environment. When London leaves that environment
those jobs will go, not just at HSBC but across our financial sector. See my
other larger post on this page for further details.

~~~
randomname2
It was reported in the media and by politicians as, "banks will move to Paris
and to Frankfurt if Brexit happens", and articles like this only perpetuate
that talking point.

------
lordnacho
There's an ongoing offshoring of certain divisions anyway, something the
article alludes to with the Polish IT staff. That kind of thing is Brexit
independent.

Michelin stars are not synonymous with having good restaurants. Something like
a good steakhouse is not captured my Michelin, which is a very narrow
definition of good food. There's also the requirement of variety, which London
does extremely well: food from many different cultures, at different price
points.

It's also not that clear that Brexit will force finance away from London,
which is well entrenched.

~~~
simonh
> It's also not that clear that Brexit will force finance away from London,
> which is well entrenched.

Maybe not all, but a lot.

Over the last few decades London has captured a lot of business that has to be
conducted within the EU for regulatory and legal reasons. One example is
clearing trades; London clearing houses have captured about 80% of clearing
activity from exchanges all across Europe. there are many others. Another is
the LSE/Berlin stock exchange merger which was going to see the German
exchange hosted and operating from London. That deal will not now happen.
Unless London keeps it's financial services 'passporting' arrangements, much
business conducted in London will have to be conducted within the EU.

London will not keep it's passporting rights though. The EU is built on four
fundamental principles. The free exchange on good, services, capital and
workers. These are inextricably linked. Since canceling the free movement of
workers was the defining issue of the referendum, we will lose all four. Thus
the referendum result in incompatible with membership of the European Economic
Area or any similar agreement. Think about it this way. Is it fair for London
to have the right to conduct business on behalf of EU businesses in London,
but EU workers not to have a right to work in those London businesses? If
London businesses can trade in the EU under EU rules, then EU companies should
be able to set up business in London under EU rules but won't be able to
because London won't be part of the EU. That's how the EU thinks about these
things. They would see such an arrangement as a fundamental betrayal of their
own citizen's rights.

Finally, according to EU law no member country can negotiate trade agreements
with the EU, or other EU countries, or countries outside the EU. That means by
law, we cannot even start to negotiate any deals with anyone until _after_ we
officially exit the EU, which will probably 2 years after invoking Article 50.
These deals can take many years, it took Canada 7 years to negotiate the
latest deal and that's still waiting on ratification by all member governments
which is likely to take another couple of years. Our economy will be operating
under bare minimum WTO rules with no special provisions with anyone anywhere
for _years_.

Our best option may be to exit the EU, then immediately apply for European
Economic Area membership under default terms. Since we're already compliant
with all the regulations, we should be able to fast track that, but it would
still probably take 2 years or more during which we will be cut out of large
swathes of the EU financial services industry. That business will have to be
conducted somewhere, but it won't be in London. It would also mean totally
betraying many key issues in the referendum though.

So this all doesn't mean London will stop being a center for finance, but when
we talk about a large, double digit percentage of business leaving London it's
not because people want to take that business elsewhere, it's because they
will be legally obliged to.

~~~
bodyfour
> Another is the LSE/Berlin stock exchange merger which was going to see the
> German exchange hosted and operating from London. That deal will not now
> happen.

DAX is in Frankfurt, not Berlin.

What will be interesting is if the deal _does_ go on, but happens in reverse.
It might provide an easier path for LSE-listed companies with a heavy European
interest to move to DAX.

> we cannot even start to negotiate any deals with anyone until _after_ we
> officially exit the EU, which will probably 2 years after invoking Article
> 50

The two year window post-A50 is specifically for such negotiations. However
I'm also pessimistic since I don't think 2 years is enough nor will the EU
want to extend it (which would need unanimous support for member states)

~~~
sveme
> The two year window post-A50 is specifically for such negotiations

Actually not, the two years is just for getting the divorce right. Most
experts indicate that a new arrangement can only be found after the divorce is
complete. Though all that probably depends on what kind of leverage rEU wants
to keep in dealing with the UK.

~~~
simonh
I think before the referendum everyone assumed the 2 years was to negotiate a
new deal. Certainly all the pro-Leave campaigners seemed to think so. I'm a
bit shocked that the remain camp didn't point this out earlier. It seems to me
neither side really had any good idea of what exit actually would involve.

~~~
makomk
I think the reason everyone assumed that was because that was the general
consensus. The idea that the EU and UK can't negotiate new trading terms until
after the 2 years is up seems to be something the European Commission pulled
out their ass in the last day or so.

~~~
bodyfour
No, I think you're confused.

What they've said is that they're not willing to negotiate BEFORE the 2 years
is TRIGGERED. i.e. they don't want the UK to foot-drag on triggering A50 and
prolonging the process indefinitely. Basically, "shit or get off the pot"

The EU position is that if the UK is really going to trigger it, then they
should do it as soon as the next PM is installed.

Again, the 2 year window is explicitly for these negotiations. It has not
started yet, though.

~~~
makomk
I'm not confused, it's just a mess. No negotiations before the two years is
triggered was the original EU position. The EU (or at least their trade
comissioner) has come up with a new escalation, claiming that the UK also
can't negotiate any post-Brexit trading terms as part of the exit
negotiations, that they have to leave the EU first before they can start
negotiating on how to trade with the EU:
[http://www.theguardian.com/politics/2016/jul/01/cecilia-
malm...](http://www.theguardian.com/politics/2016/jul/01/cecilia-malmstrom-eu-
trade-commissioner-brexit-uk-wto) This is bad not just for the UK, but also
for EU states reliant on trading with the UK.

------
bodyfour
One thing this article doesn't mention is the political risk in each place.

Amsterdam is ranked high, but many consider it The Netherlands the next
"domino to fall" since the far-right anti-EU party is polling so well there.
So if you move business there, you might be back to square one a year later.

------
xedarius
The article doesn't seem to consider that London may become more attractive to
the financial sector. You know what banks hate? Regulation, you know what the
EU has loads of .... that's right regulation. The UK will be able to offer a
environment where financial services can thrive. Seems to have worked out for
Singapore, and London already has quite the head start.

Interesting times.

~~~
monk_e_boy
These articles are mostly FUD and partly from the bankers as a not so gentle
prod to the UK government (Don't forget us, the banks) to deregulate a bit.
We'll most likely get a Troy government next so deregulation is almost
certain.

I think London will be ok.

------
realo
Well... Actually it would seem that Scotland would really like to become
independent and be part of the EU.

That article should have considered Edimburg, even if it might have been a
journalistic faux-pas.

~~~
throwaway987611
Scotland won't be independent, because they would have to take the Euro.

They won't be allowed to use the Pound.

So, they will end up like Greece.

I really why people don't see this.

It's the BRITISH parliment in WESTMINISTER who will decide who uses the pound.
NOT YOU, Mr/Mrs Commentator.

And they will decide to not allow scotland to use it.

~~~
gambiting
Well, they could, theoretically, print their own pound(as they already do) and
tie its value to that of GBP. Or maybe don't do that, and have it separate,
like US and Canadian dollars. I know you are going to say that if they join EU
they would have to take the eruo - but I don't see why it couldn't be
negotiated away, there's plenty of countries which agreed to take the
Euro(Poland for example) but after the 2008 crisis, suspended the adaption
indefinitely.

~~~
arethuza
Scottish banks do indeed print their own bank notes (as do some in NI)- but
they are for the GDP.

Mind you, you used to get situations (a while back) where foreign exchange
places in Europe would give you worse exchange rates for Scottish notes rather
than English ones.

~~~
loopbit
Foreign exchanges giving worse exchange rate is better than the situation I've
had many times in england, were I was simply unable to pay with or exchange
northern irish or scottish pounds.

Someone told me that, by law, they have to accept those notes, but I still
have ~40 NI pounds that I took to london on a trip a couple of years ago and
had to take back with me.

~~~
doc_holliday
By law they have to do no such thing.

It's a a very tender point with people because people get weirdly patriotic
regarding Scottish Pound Notes. But they are a sort of bizzare currency.

Scottish notes are a legal currency, but not a legal tender. In fact there is
no such thing as legal tender in Scotland. Even BoE notes are not legal tender
in Scotland.

Legal tender only means you can legally pay down debts by court order in the
given currency. BoE notes fulfill this job, but only in England & Wales.

"Someone told me that, by law, they have to accept those notes"

No, they don't even have to by law accept BoE notes in England. Only for
paying down debts by law is that true.

Any shop or whatever can refuse or accept anything you give them.

However, to add further confusion, every single pound of Scottish notes is
backed up by BoE pound sterling.

In the banks that print Scottish notes (Clydedale, RBS, Bank of Scotland) they
have to keep an equal ammount of BoE Sterling.

They even created special notes so they could hold the currency in their
vaults in Banks.

You can get £1,000,000 and £100,000,000 notes called Giants and Titans, which
back up the Scottish and NI pound notes.

What you are legally entitled to do however (I think?) is go into any branch
of Bank you have a Scottish note of and request the equal in BoE note.

So if you have £20 RBS Scottish note, you can go in to an RBS branch legally
and claim your BoE note with a nice picture of Adam Smith on it :)

------
gonvaled
Why is English so important? You are going to speak it in the workplace, for
sure, but why do you need that the people in the street are fluent in English?
The couple of sentences that you'll exchange in the restaurant will come
through even if people are not fluent.

~~~
michaelt
Firstly, if you think people who move to a country and don't learn the
language well are assholes, and you don't want to be an asshole.

Second, you may need a decent command of the local language to access services
and deal with the local authorities. For example, getting your car back if
it's towed. Figuring out whether you can get a visa for that foreign
consultant. Expressing your views to your political representatives. Getting
emergency care at a hospital. Understanding laws written in the local
language. Passing a driving test. Talking to your children's teachers. Working
out how much you'll be taxed on that thing you're considering having imported.

~~~
alkonaut
I think scoring high on the list in the article requires that you can do all
of the above with ease, without learning the language. That would be the case
in e.g. Stockholm, Amsterdam, but perhaps more difficult in Paris or
Barcelona.

------
macygray
Frankfurt got 54 points and it's said, that it lacks culture in opposite to
Berlin. But Berlin is not even in the list, why?

------
johan_larson
I'm always a bit surprised to see entries like "good restaurants and cultural
offerings" on lists like these. Aren't the people these companies are trying
to hire really really hardcore workaholics? How much time do they really spend
going to the opera?

Maybe I'm an outlier, but my own tastes in culture are amply satisfied by a
decent bookstore and movie theatre, or in a pinch Amazon and Netflix, these
days.

~~~
lsd5you
For finance types, I would say it's largely about status - i.e. having
something 'better' than other people. Even if they cannot fully appreciate
these things.

------
allendoerfer
> Its population of 2.5 million could absorb a large influx of financial
> professionals.

Frankfurt is just growing over 700k people.

~~~
lukasm
From wiki

Population (2014-12-31)

• City 717,624 • Urban 2,221,910 • Metro 5,500,000

I wouldn't be surprised that there is 7mln that can commute to Frankfurt.

~~~
allendoerfer
Frankfurt has some smaller outpost cities, which are extremely rich like
Königsberg and Bad Homburg (this is why Frankfurt is not Munich-expensive and
nowhere near London-expensive) and there are a few major cities from which you
can easily commute like Darmstadt, Offenbach, Wiesbaden and Mainz plus people
from villages all over Hesse work in Frankfurt.

Still Frankfurt itself is a small village with an airport and a few towers.
The city itself calls it "the biggest village in Hesse" [0].

[0]:
[http://www.frankfurt.de/sixcms/detail.php?id=2942&_ffmpar[_i...](http://www.frankfurt.de/sixcms/detail.php?id=2942&_ffmpar\[_id_inhalt\]=8489384)

------
yvdriess
Wait, Brussels was not even on the list?

------
restalis
For your own health's sake, please consider the next place to have a nicer
weather, like Malta or something!

------
Bromskloss
Why does it have to be in the EU? Can it not remain in London (or in New
York)?

~~~
lukasm
It's all about risk. If the negotiation fall through and GB won't have access
to the single market it makes sense to move the business. If you want to trade
with a customer in France you may be legally required to have a business there
or in EU.

------
SoleSoul
New Londo

~~~
s_kilk
Appropriate, given most of the UK will look like the New Londo Ruins soon
enough.

------
yAnonymous
>Badly hurt by the financial crisis, the Dutch have capped bankers’ bonuses at
just 20 percent of their annual salaries — a far more drastic curb than was
imposed by the European Union. Several bankers told me that unless the Dutch
repealed the cap, they wouldn’t consider moving to Amsterdam. “I’d love to
relocate to Amsterdam,” one top executive told me. “But I don’t think we’re
wanted there.”

My deepest sympathy goes out to the poor bankers.

~~~
varjag
If there is market incentive to move banking to Holland, it will happen. The
bankers will move where the jobs go, they don't have much say in the matter.

~~~
yAnonymous
They are basically giving the bonuses to themselves, so if they can't do that,
there goes the incentive to move to that country.

~~~
saiya-jin
you don't know much about banking, do you

~~~
yAnonymous
More than you know about punctuation.

------
crdoconnor
[http://www.wewilldrivethemtotheairport.co.uk/](http://www.wewilldrivethemtotheairport.co.uk/)

~~~
dingaling
Would probably be better if they didn't use a BMW light-cluster in the banner.
What with it being German.

Perhaps a Toyota Avensis, built in Derbyshire...?

~~~
ZeroGravitas
That site was set up in 2013, when the EU moved to cap banker's bonuses, and
the UK government went to court to stop them doing so. So the German car is
appropriate.

