Standard Chartered picks Frankfurt for post-Brexit EU subsidiary
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Standard Chartered has announced plans to establish a new EU subsidiary in Frankfurt, becoming one of the first banks to select Germany’s main financial centre as its alternative European hub to cope with the disruption of Brexit.
José Viñals, StanChart’s new chairman, said at the bank’s annual meeting that the likely move would cause “minimal disruption” to the bank’s operations as it already has an office and several staff in Frankfurt.
He added that the bank was in talks with German regulators about upgrading the status of its Frankfurt office from a branch to a more heavily regulated subsidiary. Banks expect that after Brexit they will lose their right to operate across EU markets without having a
separately capitalised subsidiary in the remaining 27 member bloc.
StanChart has consistently downplayed the impact of Brexit on its activities, which are focused on emerging markets in Asia, the Middle East and Africa, compared to other international banks that earn a large chunk of their revenues from the EU.
The bank, which had considered other cities for its new EU hub including Dublin, expects to shift a small number of jobs to its expanded Frankfurt office, expected to be in the low tens rather than hundreds.
It earns less than 5 per cent of its revenues from operations in continental Europe, though it books a big chunk of its international business through its London headquarters.
Since the UK voted to leave the EU last year, European cities have been lining up to try to tempt financial services companies to move jobs and activities there from London. Frankfurt seems to have an early lead over rivals, including Paris, Dublin, Luxembourg and Amsterdam.
Lawyers say that big banks are facing growing pressure from clients to explain how Brexit will affect the way they provide services on the ground. This is prompting some groups to move staff dealing with clients in the other 27 EU countries into those locations.
A senior Deutsche Bank executive warned recently that nearly half the German lender’s 9,000 staff in the UK could be forced to be relocated – mostly to its headquarters in Frankfurt – under pressure from regulators because of Brexit.
Several of the biggest US banks are considering establishing their new EU base in the German financial centre, which is the home of the European Central Bank.
HSBC has said it plans to move as many as 1,000 jobs from London to Paris, where it already has a large subsidiary. Lloyds Banking Group has announced plans to establish its European base in Berlin. Barclays has hinted that it is likely to make Dublin its new EU hub.
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