
$1T is leaving Britain because of Brexit - ryan_j_naughton
https://www.cnn.com/2019/01/07/investing/brexit-banks-moving-assets/index.html
======
myrandomcomment
No surprise. Passporting (allow banks to operate in all members of the EU if
they are licensed in one member) is a key to all of the banks operations.
Every bank based in London for that purpose now has to open a regulated branch
in an EU member. The next thing to kill the market in London will be the
movement of Euro clearing to an EU member. Brexit is a self inflicted shot to
the head. The number of people that supported leave and lacked understanding
of all the ties of the businesses that operate in the UK but sell in the EU
was amazing. All the car manufacturing will be the next to move. There goes
all the good jobs that the leave camp said were being stolen by immigration.

Edit: typo and to clarify I am not an UK or EU citizen, only outside observer
of the train wreck.

~~~
lazyjones
> Every bank based in London for that purpose now has to open a regulated
> branch in an EU member.

How many of them don't have one yet?

Also, every bank based in the EU will have to open a regulated branch in UK in
order to operate in this large market.

> The number of people that supported leave and lacked understanding of all
> the ties of the businesses that operate in the UK but sell in the EU was
> amazing.

Perhaps they're just not trying to see only the drawbacks and ignore
successful non-members in Europe like Switzerland and Norway.

~~~
SmellyGeekBoy
The UK is the 5th biggest economy in the world. Switzerland is 20th and Norway
30th. The UK has traditionally punched well above its weight economically, it
will be interesting to see if we become just another Switzerland or Norway
after Brexit rather than the world economic power that we are today.

Being the banking capital of the EU is a _huge_ contributing factor to that
position, btw.

~~~
namdnay
\+ Norway and Switzerland both have partly artificial economies, buoyed by Oil
for the former and dirty money for the latter.

~~~
siquick
Britain has both oil in Scotland, and dirty money flowing through London

~~~
namdnay
Indeed, but not enough unfortunately

------
GreaterFool
> have shifted at least £800 billion ($1 trillion) worth of assets out of the
> country

And what's the significance of that? Suppose I had $100 in a bank in UK and I
moved it to a bank in Germany. Neither country is better or worse because of
that. The article doesn't bother to explain the ramifications.

Deals are made in UK because English law is really, really good. Having to
maintain offices in EU will surely increase the capital requirements of the
banks but it's not a straightforward "Britain is XYZ poorer because banks
shuffled some stuff around" situation.

~~~
ryan_j_naughton
Your seriously misunderstand the banking sector's very real impacts on
everyday lives.

Having more assets under management is very impactful because money doesn't
just sit in a bank -- it is used again for other things. Thus, there would be
less money for loans and other investments.

If you're trying to get a mortgage or start a business, that's very impactful.

If you are a construction worker and financing for new commercial real estate
is down, that's impactful.

If you're a factory worker and the factory can't get access to capital to
launch a new product line.

All very real impacts.

~~~
growlist
This is just such complete and utter nonsense it's hard to know where to
start. Are you honestly suggesting that good opportunities to make money by
lending to British businesses/consumers are not going to be taken advantage of
due to this money going to the EU?! Last time I checked banking was global.

------
cm2187
The article doesn't mention how much of these assets will be backed to back to
an entity in the UK, effectively making the shift of the assets a mere
operational step. And working in the industry, I expect the number to be
substantial.

------
saosebastiao
The article implies through its journalistic voice that this is objectively
bad for GB. The fact that capital has left the country does not have any
implication towards the rationality of that move. Various questions to ponder:

1) If this is just capital moving around within their own respective due to
legal jurisdictional changes, this may be rational and may not even matter at
all. Sometimes you change your behavior due to a change in rules but it
affects you neither positively nor negatively.

2) If capital is leaving due to economic fears of leaving the EU, it may be
entirely irrational. It has yet to be seen the long term impacts of leaving
the EU. It isn't even a settled matter as to whether being a part of the EU is
a good thing. Switzerland has done just fine without the EU, Greece has made
off like bandits by being a member of the EU, and Germany has likely slowed
their potential economic growth by being tied to countries like Greece via the
EU.

3) Capital system geographies are surprisingly robust to change. It took
centuries for capital systems to move away from Venice and later the low
countries. Those capital systems survived massive recessions, multiple
unprecedented geopolitical shifts, and numerous invasions and wars. They
didn't die because of political turmoil or economic turmoil, they died because
other regions learned from them and incrementally improved on their
innovations. Compared to the level of turmoil seen in Europe throughout the
16th-19th century, Brexit looks like a walk in the park.

I hold zero opinions on whether Brexit is good for Britain. But economically
speaking, I don't see much to fear. I haven't seen much indication that they
are trying to destroy their trade regime that was established by default
through their membership in the EU, which means that it is still effectively a
single market. They already have their own currency and it was already free
floating. The banking industry may be prominent in the UK, but all the banks
were already multinational and headquartered in various countries to begin
with; HSBC isn't losing out on EU business any more than Citibank is. Why is
everybody running around like the sky is falling?

~~~
2-chainz
Agreed, economics is very finicky and hard to predict with such a high degree
of confidence at this scale of complexity. There is a lot of sensationalism
and overreacting but until this actually happens and there is time for the
market to stabilize it is impossible to know for sure whether this is a net
good or net bad.

------
nwah1
Even if the end result of Brexit would be neutral in any circumstance, it is
entirely possible that prolonged uncertainty would be bad, considering the
aphorism that "markets hate uncertainty."

Although, uncertainty doesn't seem to be a big deal in bull markets, so it
could be contextual.

------
GreeniFi
I was reminded of this quote from The Big Short at the weekend:

 _”I have a feeling, in a few years people are going to be doing what they
always do when the economy tanks. They will be blaming immigrants and poor
people”._ (Mark Baum).

Many people feel that austerity policies post the 2008 crash distilled
feelings which led to Brexit.

If Brexit leads to another crunch, one scenario is a lot more right-wing
politics, not less.

This is obviously not necessarily true, but the possibility made me very sad -
and makes one wonder whether Brexit will trigger a spiraling political and
economic crisis in the UK, not resolve one.

------
hkt
It really is regrettable that my country has decided to blow its own head off.
Finance was pretty much all we had after Thatcher "strategically" destroyed
manufacturing and placed the entire country outside of London into a state of
"managed decline".

C'est la vie. Maybe I'll move to Ireland.

------
PhasmaFelis
> _Banks and other financial companies have shifted at least £800 million ($1
> trillion) worth of assets_

Hang on, that's not right. Do they mean "£800 _billion_ ($1 trillion)", or
"£800 million ($1 _billion_ )"?

~~~
arethuza
Seems to have been fixed: "£800 billion ($1 trillion)"

~~~
minikites
Perhaps related to
[https://en.wikipedia.org/wiki/Long_and_short_scales](https://en.wikipedia.org/wiki/Long_and_short_scales)?

~~~
Symbiote
Unlikely, the long scale form has been obsolete in Britain for decades.

I've heard people say things like "thousand million", but I've never heard
"milliard", and never heard "billion" to mean 10¹².

------
kingkawn
It is a meaningful coda to the history of the British empire that they now
choose willingly to descend into underdevelopment and poverty.

~~~
Arwill
The fact that the British empire existed is certainly a reason why they were
willing to vote for Brexit. With a bit lesser ego they might have stayed in
the EU.

------
Zigurd
This is 21st c. social media-based warfare. Damaging the West with brexit and
right wing nationalists is as strategically effective as a victory in a
shooting war.

~~~
dep_b
> Damaging the West with [...] right wing nationalists

Ya if only we were as open minded as China and Russia we would win this war.

~~~
8note
are Muslim bans open minded?

~~~
dep_b
I don't think the Muslim bans in China are open minded. Of course not.

------
bayesian_horse
It really looks like they are going through with it. Up to a couple months ago
I almost expected the Brexit to be cancelled.

I wonder when Britain will try to get back into the EU. It would take the
swallowing of a lot of pride on the British side, but basically there is
already a majority against the current Brexit conditions, pretty soon there
will be a majority for remaining in the EU, period.

------
mbrumlow
Lots of things are going to change. Things worked before the EU. I am sure
things will continue to work after the exit.

~~~
siidooloo
Britain isn’t going to turn into some Mad Max wasteland like some claim, but
it will be worse off. The big thing is that on average the larger more open
market will have more growth than the smaller more closed one. That growth
will be compounded over the years. In several decades people in Britain will
be asking why people in Poland have a better standard of living than them.

~~~
lazyjones
> _In several decades people in Britain will be asking why people in Poland
> have a better standard of living than them._

In case this ever happens - it won't - this will be attributed to the EU
pumping billions into Poland's budget every year. Net benefit to Poland is
higher than the UK's yearly contribution to the EU budget nowadays.

------
onetimemanytime
IMO it's pretty dumb of the British. You can't join and leave just like that,
everything is integrated with EU.

Now, go ahead and undo it because a few % more voted to leave at a certain
point. These decisions to join/leave should be like adding a new
Constitutional Amendment in USA, very hard to do, either way and require
super-majorities.

------
lazyjones
Is that good or bad news for Britons? Most tangible assets won't be leaving
any time soon and nobody but banks will miss this amount in the banks'
accounts. It's very likely that real assets, like real estate will become a
little more affordable.

Car registrations fell here in Austria as well, despite good economic
indicators, it's not a big deal.

~~~
arethuza
"real estate will become a little more affordable"

For many people in the UK any decrease in house prices is regarded as a _very_
bad thing indeed.

~~~
pc86
Only for people using real estate as an investment or their primary store of
wealth.

~~~
jen20
In 2015-16, 62.9% of UK households were owner-occupied. A drop in house prices
(which would be incredibly welcome for me, as a prospective purchaser!) would
lead to negative equity for a significant number of voters in the south east
and especially the south west - no political party wants to own that, though
both major parties in the UK bear responsibility for it.

~~~
lazyjones
> would lead to negative equity for a significant number of voters in the
> south east and especially the south west

This argument requires some hard numbers to make.

A significant number of owners bought their homes a long time ago and won't be
affected.

A significant number of owners live in areas where prices were not affected by
EU investment.

A significant number of NEW prospective owners will have access to lower
prices in currently extremely crowded markets.

So, less alarmism, more facts and numbers please.

~~~
jen20
> A significant number of owners live in areas where prices were not affected
> by EU investment

[Citation Needed]

EU membership has improved the _entire_ economy, and thus house prices
nationwide.

\--

I can't quite tell if you are from the UK or not, but fixed rate mortgages are
not normal. Even purchasers who purchased 20 years ago commonly have to
refinance their property every two years or so in order to get a fixed rate.

------
olivermarks
There is a massive 'fear campaign' drip dripping dire news in the UK every day
if the people don't reconsider leaving a federated europe. The EU is well past
its sell-buy date, won't reform and globalization has taken full advantage of
its undemocratic structure for offshore commercial gain.

The divide and rule aspects of the UK EU referendum results are being
exploited to the full. Like the last US election there is no good result for
the English people - remaining or leaving are both going to have an ugly side.
The City of London rules the financial world and enables incredible sums to
float offshore via trusts and opaque corporate setups. What we are seeing is a
further divide between the haves and have nots.

[https://youtu.be/np_ylvc8Zj8](https://youtu.be/np_ylvc8Zj8) < spiders web
documentary

'At the demise of empire, City of London financial interests created a web of
secrecy jurisdictions that captured wealth from across the globe and hid it in
a web of offshore islands. Today, up to half of global offshore wealth is
hidden in British jurisdictions and Britain and its dependencies are the
largest global players in the world of international finance.'

This makes the consumer banks and FS firms shuffling fiat currencies around
europe a tiny drop in the ocean

~~~
olivermarks
The Cayman Islands are the 5th largest financial centre worldwide, via City of
London

[http://blogs.lse.ac.uk/usappblog/2017/11/11/the-cayman-
conun...](http://blogs.lse.ac.uk/usappblog/2017/11/11/the-cayman-conundrum-
why-is-one-tiny-archipelago-the-largest-financial-centre-in-latin-america-and-
the-caribbean/)

