Lloyd’s of London, the world’s biggest specialist insurance market, announced today a new European subsidiary located in Brussels.
It will be up and running by 2019.
The decision comes a day after British prime minister Theresa May invoked Article 50 of the Lisbon Treaty, the official EU exit clause.
Lloyd’s of London’s chief executive Inga Beale explained why Brussels was the bank’s location of choice in a statement.
Brussels met the critical elements of providing a robust regulatory framework in a central European location, and will enable Lloyd’s to continue to provide specialist underwriting expertise to our customers.”
However, she stressed that the Brussels office was simply an additional base and that the number of London jobs affected was less than 100.
The new subsidiary will have its own board and employ about 60 staff initially, including people already working in Germany and Italy.
Lloyd’s has been one of many UK businesses lobbying the government to guarantee passporting rights, allowing UK banks and insurers to do business across the EU without difficulty.
The expected loss of those rights after Brexit is precisely why the 328-year-old insurance market chose to set up an alternative base.
The confirmation of the move came as Lloyd’s unveiled its annual results reflecting tough market conditions. The company’s annual profits were flat at £2.1bn for 2016, the same as for the year before.
London could lose 10,000 banking jobs and 20,000 roles in financial services as clients move 1.8trn euros ($1.9trn) of assets out of the U.K. after Brexit, according to think tank Bruegel.
So, who else is considering moving their financial operations abroad and where could they go?
1. Goldman Sachs
Goldman Sachs, the US investment bank, that employs around 6,000 people in the British capital, has hinted it could move some of its operations away from London.
Speaking a week before May triggered Article 50, Richard Gnodde, chief executive of Goldman Sachs International announced that the bank was making contingency plans.
“We start with a significant European footprint, we are licensed with banks in Germany and in France. Over the next 18 months or so we are going to upgrade those facilities, we’ll be taking extra space in a number of them and be increasing our headcount and infrastructure around those facilities,” he said in a statement.
In January, news broke of the bank’s potential shift of 1,000 London jobs to Frankfurt, the major German financial hub.
Goldman currently employs about 200 staff in Frankfurt and 100 in Paris.
“Whatever the outcome [of the Brexit talks], London will remain for us a very significant regional hub and a significant global hub. London will remain a very significant important centre,” Gnodde added.
HSBC, one of the largest banks in the world could relocate 1,000 staff to Paris when Brexit becomes effective.
“Activities specifically covered by EU legislation will move,” HSBC chief executive Stuart Gulliver said in January.
3. JP Morgan
US investment banking giant JP Morgan is in talks to relocate hundreds of its London-based employees to a new office in Dublin.
The lender is negotiating the potential purchase of a 130,000 sq ft building in Dublin’s Capital Dock — enough space for more than 1,000 members of staff.
“Other options are still very much on the table. We want to see how negotiations progress,” JPMorgan said in a statement. “No final decisions have been made.”
The bank currently employs 16,000 in the UK, and has obtained licences to operate across the EU including Dublin and Frankfurt.
“We have spent the last several months reviewing the many variables in this process – client needs, employee considerations, regulatory requirements, operational risks, our inventory of licenses, political issues in the region and dozens of other factors,” JPMorgan’s investment bank head Daniel Pinto and wealth management boss Mary Erdoes said in an email to staff on the day that May triggered Article 50.
Swiss banking giant UBS warned that thousands of jobs could leave London.
“We cannot postpone decisions on how we run our European operations,” UBS chairman Axel Weber said at a conference in Frankfurt earlier this month.
UBS currently employs 5,000 people in London.
“Institutions like ours are faced with very important decisions about how to reshape our operations, given that London will no longer be part of the EU,” Weber added. “Two years for us just will not work.”
Although UBS has not publicly stated where it could relocate to, Frankfurt is one of the favoured destinations of UBS, those familiar with the Swiss bank’s decision-making process told the Financial Times.
Barclays has chosen Dublin as its headquarters within the European Union.
The UK bank plans to add 150 new members of staff to its Dublin office.
Barclays CEO Jes Staley said the bank may reassign its Frankfurt branch to its Irish subsidiary, Bloomberg reported.
“Same people, same traders, you have to book a trade in Ireland as opposed to London, but that’s not a wholesale move of our capability from London to Ireland,” he said.