Investments

No-deal Brexit may need investment banks in London to have ‘chaperones’ for EU clients

no deal brexit

Investment banks in London have warned their M&A teams that they would have to loop in EU colleagues when talking to customers in Europe in the event of a no-deal Brexit

Investment banks in London such as Credit Suisse and Nomura have warned their M&A teams that they would have to loop in EU colleagues when talking to customers in Europe about specific advisory work and regulated products like loans or bonds, in the event of a no-deal Brexit.

In the hard exit scenario, even the cold-calling of company executives to pitch for new business out of London could cause issues with EU regulators.

A financial services partner at Clifford Chance, Simon Gleeson said there is a whole bunch of things people have to do in the course of an M&A transaction which require regulation.

The problem is that at the start of the discussion there is no idea how to finance the deal, Gleeson said, referring to what could happen if there is no Brexit deal.

Credit Suisse is working to maintain access to EU clients and markets through the use of existing infrastructure if there is a hard Brexit, a spokesperson for the bank said.

Discussions with relevant regulators, employees and key stakeholders continue but as it has previously stated, its solution will involve multiple locations, including Madrid, Frankfurt and Luxembourg, the company said.

London will remain a key part of the bank’s footprint even after the UK’s exit from the European Union.

Prime Minister Theresa May on Saturday vowed to speak to every EU member state leader “over the coming days”, as she wrote to Conservative MPs to appeal for unity over Brexit.

The plea came after May suffered another parliamentary defeat over Brexit, suggesting a shortlived period of party unity over reforming her draft EU divorce deal may not survive.

However, even with a deal assured that may not be enough to stop Brexodus in the banking industry. Wall Street banks based in London are moving offices to EU as Brexit looms closer.

In Frankfurt, Germany, Morgan Stanley’s European hub will double its staff of 200. In Paris, an empty art deco postal office is on its way to becoming Bank of America’s headquarters for its European brokerage arm, as the NYT reports. In Dublin, Bank of America, Citigroup and Barclays are expanding their ranks.

The financial landscape of Europe is changing as banks shift employees and hundreds of billions of dollars’ worth of assets from London to new subsidiaries across the bloc in time for Britain’s divorce from the European Union.

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