Wall Street banks could abandon Britain for the Republic of Ireland if the UK decides to leave the EU, senior figures in the industry have reportedly said. This is despite a Forbes report that names London the world’s ‘most influential city’.
Changes to EU banking rules could see London stripped of its financial preeminence. Some major institutions including Bank of America, Citigroup and Morgan Stanley are believed to be drawing up plans to desert the City amid concerns the UK is drifting further from the EU.
This is despite a Forbes list of "The World's Most Influential Cities 2014" which ranked London as the most influential city in the world, because it attracts more than double the amount of foreign direct investment deals than New York, which came in second.
Most US and Asian banks currently run their main European operations from the UK, which entitles them to provide services across the EU. But if the UK left the EU, it is unlikely foreign banks based in London would hold on to this benefit.
One senior UK-based manager at a Wall Street bank told the Financial Times: “I’m frankly looking at moving some activities to Ireland. I think the Irish central bank and government would welcome this.”
Another banker told the Irish Times: “Dublin is selling itself very hard at the moment.”
Citigroup employs around 2,500 people in Ireland, while JP Morgan and Bank of America each employ 500 staff there. The Republic has become attractive to foreign bankers drawn to its low corporate tax rate, English-speaking workforce, and eurozone membership. Frankfurt and Paris also represent attractive alternatives.
Foreign banks based in London have consistently warned the UK Treasury about the possible consequences of an EU exit.
In a submission, the Association of Foreign Banks said Britain should stay in the EU because it would remain in a position to influence rules in Brussels.
“If Britain withdraws from Europe, then foreign banks may reassess their reasons for maintaining their business in Britain and may decide to continue their business elsewhere,” a spokesman for the group said.
More than 250 foreign banks are currently hosted by the UK. In total, they accounted for around one-third of last year’s £71 billion financial services trade surplus.