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| Hard Brexit threatens global financial system, City chiefs tell MPs | Hard Brexit threatens global financial system, City chiefs tell MPs |
| (35 minutes later) | |
| Brexit poses a risk to the global financial system and could spark more than 230,000 job losses in the financial sector, senior City figures have warned MPs as they called for clarity on the UK’s future relationship with the EU. | |
| Xavier Rolet, chief executive of the London Stock Exchange (LSE), warned that Brexit could have an impact on “unimaginably large” contracts which are cleared through the City and which might need to be transferred to the 27 remaining EU member states. | Xavier Rolet, chief executive of the London Stock Exchange (LSE), warned that Brexit could have an impact on “unimaginably large” contracts which are cleared through the City and which might need to be transferred to the 27 remaining EU member states. |
| The HSBC chairman, Douglas Flint, also giving evidence to the Treasury select committee, said that while banks did not want to move activities outside London they had to plan for the worst. | The HSBC chairman, Douglas Flint, also giving evidence to the Treasury select committee, said that while banks did not want to move activities outside London they had to plan for the worst. |
| They called for clarity from Theresa May on the UK’s approach to the EU ahead of the start of formal exit negotiations. The prime minister has said that article 50 – the formal process of leaving the EU – will be triggered in March, which has prompted warnings that banks will implement plans to let them keep operating inside the EU. Anthony Browne, chief executive of the British Bankers’ Association, has warned that banks were quivering over the relocate button. | They called for clarity from Theresa May on the UK’s approach to the EU ahead of the start of formal exit negotiations. The prime minister has said that article 50 – the formal process of leaving the EU – will be triggered in March, which has prompted warnings that banks will implement plans to let them keep operating inside the EU. Anthony Browne, chief executive of the British Bankers’ Association, has warned that banks were quivering over the relocate button. |
| Flint said that some US banks in London were able to transact with big European companies because they used a “passport” from their operations in the UK and would need to find a way to keep doing this. He estimated that tens of thousands of jobs in London were at firms with such operations. | Flint said that some US banks in London were able to transact with big European companies because they used a “passport” from their operations in the UK and would need to find a way to keep doing this. He estimated that tens of thousands of jobs in London were at firms with such operations. |
| Rolet told MPs that consultants EY had conducted research estimating 232,000 roles could be lost, not just in the City, if clearing of euro denominated contracts was prised away. This research has also been presented to peers who have warned about the need for a transitional deal. Two thirds of them could be outside London. | |
| “I’m not just talking about the clearing jobs themselves which number into the few thousands but the very large array of ancillary functions, whether it’s syndication, trading, treasury management, middle office, back office, risk management, software, which range into far more than just a few thousand or tens of thousands of jobs,” Rolet said. | “I’m not just talking about the clearing jobs themselves which number into the few thousands but the very large array of ancillary functions, whether it’s syndication, trading, treasury management, middle office, back office, risk management, software, which range into far more than just a few thousand or tens of thousands of jobs,” Rolet said. |
| Rolet said he was concerned about the “systemic impact” of moving contracts that are guaranteed by the London Clearing House, which is owned by the LSE, if it was handled too quickly. The remaining EU members have been calling for contracts denominated in euros to take place inside the eurozone. | Rolet said he was concerned about the “systemic impact” of moving contracts that are guaranteed by the London Clearing House, which is owned by the LSE, if it was handled too quickly. The remaining EU members have been calling for contracts denominated in euros to take place inside the eurozone. |
| Ahead of the referendum, HSBC said it could move 1,000 roles to its operations in Paris. Flint said that number of roles was still at risk and that the bank was ready to take “pre-emptive action”, pointing out that HSBC also had operations in Ireland and the Netherlands. | Ahead of the referendum, HSBC said it could move 1,000 roles to its operations in Paris. Flint said that number of roles was still at risk and that the bank was ready to take “pre-emptive action”, pointing out that HSBC also had operations in Ireland and the Netherlands. |
| Asked about comments by Browne, Flint said: “Nobody wants to push the button. The best outcome for everybody is the preservation of the status quo in so far as possible.” | Asked about comments by Browne, Flint said: “Nobody wants to push the button. The best outcome for everybody is the preservation of the status quo in so far as possible.” |
| A bank such as HSBC which had operations in Europe “can take even longer to push the button”, Flint said. Citibank had a licence in Ireland but other banks operated in the EU through their London licence and might need to act sooner. | A bank such as HSBC which had operations in Europe “can take even longer to push the button”, Flint said. Citibank had a licence in Ireland but other banks operated in the EU through their London licence and might need to act sooner. |
| The City has been calling for a period of transition to prepare for exit from the EU. Asked about this, Rolet called for a “grandfathering period” – an exemption from new rules – that lasted longer than the two years already floated. “Two years is just too short,” he said. | The City has been calling for a period of transition to prepare for exit from the EU. Asked about this, Rolet called for a “grandfathering period” – an exemption from new rules – that lasted longer than the two years already floated. “Two years is just too short,” he said. |