Buy-side Perspectives Issue 10 | Page 10

K & K G L O B A L C O N S U LT I N G RESEARCH L ooking at the news over the last few months, it seems like the British decision to trigger Article 50 will most likely result in an opportunity for other European capitals to attract financial services firms across the European Union (“EU”) over the next five years. To date, K&K Global Consulting (K&KGC) has not seen any British authorities or associations responding with any substantial counter arguments, except the prospect of potentially reducing corporation tax, so it would become even more attractive for financial services firms to retain their business within the UK post Brexit. The true monetary outcome for the UK based on their Brexit decision, beyond self-governance and autonomy, will be realised over a much longer period given the speculative divided expectations about the survival of the European Union and the common currency. Banks The first and most obvious post-referendum move in the United Kingdom is that banks relying on European Union passporting rights based on their London presence will lose such passport access to the single market post Brexit. A number of significant banks have already publicly announced that they will move a 10 proportion of their staff from London to other European capitals. To illustrate the potential balance of power, Jamie Dimon, CEO, JP Morgan (source Bloomberg 11th July 2017) believes that the EU authorities will over time have the power to determine to what extent the banks need to move their operations from London to the European Union. While the world is watching the implications of Brexit, the once Swedish state-owned bank Nordea have decided to move their HQ out of Sweden to Finland to avoid the new costly Swedish regulatory requirements imposed by their national government. Nordea has reportedly predicted significant cost savings by moving their headquarters to Finland under the supervision of the European Central Bank (ECB). K&KGC finds it noteworthy that national politicians and regulators within the EU, with low levels of entry and exit, must place higher emphasis on harmonisation or they will face public humiliation by losing out on business to the disadvantage of the voting population. Asset Management While the UK Financial Conduct Authority (FCA) continue to increase their oversight of the UK asset management firms, the French, German, Irish, Luxembourg and Spanish authorities and www.buysideintel.com Autumn 2017