One by-election result might soften the blow, but it's not going to stop the punch: Brexit is still coming at the City of London and banks are still busying themselves making preparations for it.
Following yesterday's report that Citi is contemplating shifting some of its London-based equity and interest rate derivatives traders to Frankfurt, it looks like UBS is planning to do the same. The bank has set up a new entity 'UBS Europe SE', based in Frankfurt. The Wall Street Journal and others reported yesterday that this new office is to house UBS's wealth management operations in Europe. Handelsblatt, however, reports today that UBS also plans to house its continental European investment banking operations there. Significantly, Stefan Winter, a member of the management board at UBS in Germany is on the board of the new entity. - This is about more than just wealth management.
UBS has seemingly made its decision, therefore: when the time comes, it will be Frankfurt.
In September, Sergio Ermotti, style icon and UBS CEO, said the Swiss bank could move 1,500 people or 30% of its London staff out of the City after Brexit. The Richmond by-election aside, a few things have changed since then: the good news is that the UK might be willing to pay to access the single market, thereby maintaining the all-important passporting rights for London-based banks.
The bad news is that the European Union has proposed that banks establishing themselves in the EU with parent companies elsewhere will need to set up fully capitalised holding companies in the European Union. This will make EU-based entities (like UBS Europe SE) more expensive to run, and will encourage banks to aggregate their European businesses in one place.
Ermotti didn't say in September which jobs he anticipated moving from London after Brexit. If a proportion of the 1,500 are support and infrastructure roles, it's likely they'll go to Poland instead of Frankfurt. UBS already has large operations in Kraków and Wroclaw. Both cities contain 'talent pipelines' of keen staff. Both cities are also very cheap.