JP Morgan Chase told about 200 staff to plan to move out of London because it sees little prospect of the UK winning a deal on financial services as the nation prepares to exit the European Union.
The biggest US bank is pushing the button on its no-deal Brexit plan because it sees minimal chance of an accord for finance before year-end, according to sources familiar with the matter.
JP Morgan employees who work in areas including sales and trading will need to sign new contracts and prepare to relocate in time for January 1, the sources said. Employees will move to cities including Paris, Frankfurt, Milan and Madrid and be given six months commuting and accommodation support plus help with language courses, the sources said.
A spokesman for JPMorgan in London declined to comment.
The decision comes as years-long negotiations between London and Brussels turn increasingly acrimonious with Boris Johnson this week labeling Europe negotiators “abusive”. Earlier this month governor of the Bank of England Andrew Bailey said securing an agreement on financial services for investment banks was not worth pursuing at all costs.
While banks operating in the City of London, including JP Morgan, have previously moved staff and established new Europe entities, some are holding out for a deal before making further changes.
Some bankers will begin by commuting to European cities to minimise problems around relocating children in the middle of the school year, one of the sources said.
The Wall Street bank’s plans are further complicated by the pandemic requiring some commuters to quarantine, although limited exceptions exist for certain jobs. If there is a last-minute deal or delay they will have the option to relocate at a later date, one of the sources said.
The New York-based bank is moving staff because the EU has not yet recognised the UK jurisdiction has strong enough rules to enable cross-border trade, a process known as equivalence.
Wall Street banks and the finance industry have pressed hard for the ability to continue using London hubs for business with European clients. Unless an agreement is reached before the end of 2020, banks will be barred from doing investment services business from London with clients such as German and French pension funds.
The US lender bought a seven-floor office building in Paris’s historic 1st arrondissement in January with a capacity for as many as 450 people, an estimate made before social distancing measures restricted office capacity.