- Leaving Britain as a result of Brexit could cost London-based banks millions
- A report found banks may have to pay on average £50,000 per employee
- Fears around losing passporting rights may be a trigger for banks to move
- Amsterdam, Dublin, Paris and Frankfurt are possible relocation sites
London-based banks seeking to pack up after Brexit could end up spending as much as £50 million to relocate to the European Union, a new report says. Estimates published by global consulting agency Synechron say banks looking to relocate 1000 roles would have to shell out, on average, £50,000 per employee.
The analysis considered the financial burden of hiring and redundancy, new building, infrastructure and rent costs, and well as contingencies. Financial services organisations are expected to consider setting up in European cities like Amsterdam, Dublin, Paris and Frankfurt, where they would be able to maintain "passporting" rights, which allow financial services to conduct business across EU member states without needing to obtain licensing in each individual country.
"Financial passporting is vital to the work many banks undertake across Europe and they will have to think carefully about which city within the EU their interests and their clients' interests will be best served," Tim Cuddeford, a London-based member of Synechron's Business Consulting Practice said.
High price. London-based banks seeking to relocate to the European Union after Brexit may
need to spend as much as £50 million. Photo: CNBC
While incoming financial regulations like MIFID II may provide London-based banks an opportunity to still access the single market, fears of losing those passporting rights may be enough to spook London banks into leaving the UK. "Other cities may be just as competitive and worth considering as long as there is access to a similar talent pool and infrastructure," Cuddeford said.
The analysis assumed that 65% of staff would relocate, while 35% of the workforce would be comprised of new hires. But those cost estimates may prove to be a lower-end estimate.
Synechron's analysis doesn't take into account capitalisation costs or banking licences, given that they would vary depending on the individual firm and the requirements of each regulator.
Meanwhile, new building and rent costs could total £20.6 million alone, Synechron said. An additional 20% of the budget would need to be put aside for contingencies.
– Edited by Gayle Bryant
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