Monday, July 15, 2024

Finance jobs remained in London after Brexit vote

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Brexit failed to have a big impact on financial services jobs in London, a Financial Times study showed, with international banks retaining most of their staff since the vote to leave the EU and large asset managers hiring in the British capital.

Initial warnings that tens of thousands of jobs would be leaving the city following the 2016 Brexit vote have been drastically reduced. An FT survey of 24 major international banks and asset managers found that the majority had increased their staff in London in the past five years.

Twelve overseas-based banks, which employed around 71,000 people in London five years ago, now have a reduced staff of around 65,000. But most of the decline came from group-wide restructurings at Credit Suisse, Deutsche Bank and Nomura.

Nine of the world’s largest asset managers have increased their hires in the UK since the vote, with their combined total headcount increasing by 35% to over 10,000 employees during the period.

“There has been some change, but the scale has been relatively moderate,” said Frédéric Oudéa, CEO of Société Générale. He said his bank had moved 300 people from London to Paris.

French rival BNP Paribas has increased its workforce in the UK. Japan’s MUFG added 400 net jobs to London. Goldman Sachs has grown by around 900 employees in London since the end of 2015, even as it created 500 jobs in the EU, recruiting for its core businesses and in new areas including consumer banking and banking. cash management.

JPMorgan kept its London workforce at around 11,000, while the total number of employees in the UK increased from around 2,000 to 18,000 as the bank was hired at other locations, including the hubs. technology and operations in Glasgow and Edinburgh.

In most cases, the figures are very different from the initial estimates of companies, including Deutsche Bank and JPMorgan whose executives at one point said as many as 4,000 of their staff could leave London, and several other banks that suggested the numbers would be around 1,000.

Foreign bank workforce chart in London showing that most international banks have kept their jobs in London since the Brexit vote

“We were totally putting our finger in the air,” said a former senior executive at one of the biggest banks. “Everyone said 1,000. They thought if they said hundreds, no one would believe them.

Vanguard, the world’s second-largest asset manager, and T Rowe Price, another US-based asset manager, more than doubled their London workforce during the period to 600 and 575 respectively.

Invesco, which is based in Henley, near London, added around 295 people to bring its total UK workforce to 1,201, while Pimco, the world’s largest bond fund manager, and Columbia Threadneedle also increased their staff in London.

Workforce chart showing foreign asset managers have expanded their presence in London since 2015

The investment industry’s hiring frenzy stands in stark contrast to predictions in 2017, when UK fund managers said they expected 16 percent of UK-based asset management jobs to move to other financial centers by the end of 2020 A single respondent in a survey of 300 managers and investors by MJ Hudson, a London-based consultancy firm, said he expects an increase in staffing in the UK investment sector by 2020.

BlackRock, the world’s largest asset manager, declined to provide numbers, as did Fidelity International and Capital Group.

The fund industry’s hiring frenzy – which has also been replicated in the EU – has coincided with the rapid growth of the investment industry globally and with increasing regulatory requirements in the UK.

While asset managers have set up European funds to be able to sell to European investors after Brexit, retail investment rules allow them to retain most of their front-office investment functions at the UK.

Deutsche Bank office in London. The German lender has undergone group-wide restructurings © Jason Alden / Bloomberg

Senior industry officials say the ultimate cost to the city could be much higher depending on the end result of Brexit negotiations and the potential for the EU to develop as a financial center.

“The big question, of course, is how does the Capital Markets Union evolve, does Europe really come together and build it?” asked Richard Gnodde, director of London-based Goldman Sachs International, referring to long-standing efforts to develop deeper financial markets rather than relying on bank lending as the backbone of corporate finance.

“If you were to move even halfway between our current situation and that of the United States in terms of penetration of financial markets for corporate and investment banks, when I look at our workforce in the United States. United and our workforce here, you would add thousands and thousands. of people. “

However, he added that some of these EU-serving jobs would be based outside the region in low-cost countries.

In the EU, the fragmentation of businesses between Paris, Frankfurt, Dublin, Amsterdam, Luxembourg and other centers makes it harder for anyone to compete with London’s cluster of services and skills, but finance bosses generally believe that the EU will attract more jobs in the long run.

“The mistake that a lot of people in London made was to think that jobs evolve unlike Dunkirk, where French fishermen would look for British bankers and bring them back to France,” said Nicolas Mackel, Managing Director of Luxembourg for Finance, an audience. private partnership to develop the Luxembourg financial services center. “This does not happen. Why? Because these things take time.


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