As investment banks start thinking about where to base their employees in the post-Brexit world, are you really safer working for a large U.S. investment bank instead of a European or UK bank in London?
Employees of European banks in the City are most pessimistic of their career prospects after the EU referendum vote, according to an eFinancialCareers survey of 1,500 finance professionals in London.
In fact, 65% of European bank employees we surveyed are negative about their career prospects after the Brexit vote. Generally, fear and pessimism in the City pervades anyway – 63% of UK bank employees and 57% of those working at U.S firms said that they were negative about their career prospects.
“Generally, people are scared of losing their jobs currently, but arguably those in European banks are most likely to look for new opportunities,” says Andrew Pringle, director of recruiters Circle Square. “There’s a flight to leave European banks for U.S. firms, but this was the case before Brexit anyway.”
Uncertainty is the biggest trend in the City after Brexit. Close to 50% of people in our survey said they didn’t know whether their job would be under threat after the vote. However, 18% of those working for European firms believed that Brexit would cost them their job, compared to 12% at UK banks and 14% at U.S. institutions.
“Some of the investment banks are already sounding out their EU national employees informally on whether they would be open to a move across to the Continent,” says Stéphane Rambosson, the head of financial services at executive search firm DHR International and former head of French industrials ECM at Citigroup. “People at European institutions feel more exposed.”
One associate director at a UK bank in the City suggests that M&A and capital markets bankers remain relatively sanguine about Brexit, but that markets staff are concerned. “A lot of our markets staff are from EU countries, so could easily make the move. So far, however, there’s been little indication that the bank is rushing into any decision.”
The flight away from European banks isn’t necessarily restricted to Brexit fears. Deutsche Bank is in the headlines for being systemically dangerous, Credit Suisse has been downsizing and moving jobs out of London anyway, UBS has made some more recent cuts and Barclays has been reducing headcount by an ongoing hiring freeze.
U.S. banks, of course, haven’t been immune to lay offs anyway. However, the dominance of U.S. investment banks in Europe is growing.
A new report by LSE professor Charles Goodhart and Rotterdam School of Management finance professor, Dirk Schoenmaker, suggests that investment banking revenue in Europe is increasingly concentrated among five U.S. investment banks and that such a lack of competition in the market is “dangerous”.
Europe should “cherish” its few remaining investment banks, they suggest, and that large corporates should offer “at least one place in a further U.S. dominated banking syndicate”.
In spite of the pessimism within European banks, employees of U.S. headquartered investment banks were the most down about London. 27% of respondents to our survey from U.S. banks said they were not at all keen to work in London after Brexit, compared to 23% in UK banks and 19% in European firms.
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