If you perchance thought that your London banking job would be safe with Britain outside the European Union, you were seemingly wrong. Consultants working for leading strategy firms in London say banks have activated their contingency plans and that the London job cuts are about to come thick and fast.
“You’re looking at anything from 50,000 to 70,000 London finance jobs being moved overseas in the next 12 months,” predicts one consultant working with one of the top finance strategy firms in the City. “Jobs are going to be cut, and those cuts are going to start next week.”
Campaigning organization, TheCityUK estimated that there were 729,000 finance and finance related jobs in London in 2015, of which 143,600 were in banking.
Jamie Dimon already sent a memo to J.P. Morgan staff in London saying that the US bank, “may need to make changes to our European legal entity structure and the location of some roles.” The consultant suggested this is an understatement: “J.P. Morgan has just let four buildings in Madrid and six buildings in Frankfurt. All the banks have been planning this for weeks. At 7.30am this morning, their contingency plans kicked in.”
Dimon said previously that 4,000 of J.P. Morgan’s 16,000 UK jobs could move overseas if Britain leaves the European Union. J.P. Morgan declined to comment.
A financial services partner at another leading strategy consulting firm, also speaking on condition of anonymity, agreed that the impact of the Brexit vote will be felt sooner rather than later in London finance circles. “These banks are going to start moving roles overseas very quickly,” he said, citing one client which has made preparations to move 1,000 roles out of the City. “The impact on the London economy is going to be dire.”
Chris Wheeler, banking analyst at Atlantic Equities agrees: “There are going to be a mass of finance jobs moving out of this country and they’re going to move soon. Anyone who thinks J.P. Morgan or Morgan Stanley are going to wait years before moving their thousands of jobs is in cloud cuckoo land. They’ll want to get uncertainty out of the way and to comply as soon as possible. This is the biggest change in London since the Big Bang.”
London bankers who think they’re in with a chance to move to Madrid or Dublin could be sorely disappointed. Consultants are in agreement: roles will be cut in London rather than migrated overseas. “Why would you move someone who’s earning £150k in London to do a £60k job in Frankfurt,” said one.”Banks are going to use this as an opportunity to cut costs.”
London bonuses are also likely to plummet this year, dealing a double blow to staff at European banks who’ve seen the value of previous years’ bonus deferrals collapse. “This is just going to hammer people,” says one headhunter. “If you’re a banker in London now, you’re going to stop spending. Cancel the nanny. Cancel the holiday. Cancel the extension.”
Continental European financial centres will benefit from London’s pain. “For European banks, front office jobs are going to be repatriated to the home country – wherever that bank has it’s headquarters. Back and middle office jobs are a different matter,” said the consultant. “There, you’re looking at Dublin, Poland, or the Czech Republic.”
The real question is where US banks will choose to relocate their European headquarters. Goldman Sachs has a sixth of all its employees globally in the City and is in the process of building a big new European HQ in London’s Farringdon – although consultants said it’s been quietly looking at subletting space in the building before it’s even finished. Morgan Stanley president Colm Kelleher touted Dublin or Frankfurt as potential locations for Morgan Stanley’s European HQ in future. Madrid is a new option – and a wild card, but one consultant said it’s popular with bankers who will be kept on: “The senior guys are all hoping for Madrid.”
As bankers in London stare over a precipice, the consultants we spoke to are doing just fine. “The emails from clients are coming right, left and centre,” said one. “30 projects across different banks went live for us this morning,” said the other “All the big strategy firms, McKinsey & Co. Bain, Boston Consulting are being dragged in. Everything needs to change.”
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