Brexit deadlock scares off JP Morgan

Frankfurt financial center JP Morgan was yesterday said to be in the process of transferring about €200bn from Britain to Germany as it prepares for Brexit. America’s largest bank becomes the latest in a growing line of financial institutions – including Barclays –  who have decided to scale back their UK activities as the prospect fades of Westminster and Brussels reaching an agreement on financial services before the transition period expires at the end of December.
Ever since the referendum, the fear of losing  ‘passporting’ rights has been a significant cause for concern for the UK banking community. The EU passporting system for banks and financial services companies enables firms that are authorised in any EU or EEA state to trade freely in any other with minimal additional authorisation. These passports are the foundation of the EU single market for financial services, and UK banks now increasingly expect to lose these rights when the Brexit transition period comes to an end.
Barclays logoAs early as January 2019, an EY report estimated that banks and other financial companies had shifted at least £800bn worth of assets out of the country into the European Union and had  set up new offices elsewhere to safeguard their regional operations. Soon afterwards, Barclays received approval for the  transfer of €190bn worth of assets to Dublin. By January 2020, EY’s  Financial Services Tracker was reporting that the proportion of  UK-based financial services firms which had said they are considering or have confirmed relocating operations and/or staff to Europe had reached 92 out of 22.
In JP Morgan’s case, the City of London’s loss will be Frankfurt’s gain and the transfer of the bank’s  assets that is due to be completed before the end of 2020 will make the US bank one of the largest in Germany. More banks are expected to follow its example next year.