June 24, 2016 – Britain’s 2.2 million financial industry workers face years of uncertainty and the risk of thousands of job cuts after the country voted to quit the European Union, leaving question marks over London’s status as Europe’s premier financial center.
The ‘Vote Leave’ campaign fronted by a slew of Conservative lawmakers and financial industry veterans claimed victory over its ‘Britain Stronger in Europe’ rival, after 52 percent of Britons voted to support their plan to leave the 28-nation club.
A morning of triumph and jubilation for the Brexit camp has been overshadowed by an average 13.4 percent fall in the share prices of the top five British banks and slides of 12 to 14 percent in elite wealth managers Schroders, Aberdeen Asset Management and St. James’s Place .
The impact sent ripples across the region and European bank shares tumbled more than 14 percent , roughly twice as steep a fall as that seen among big companies, with lenders in Italy and Greece hard hit.
A leave vote means the future of Britain’s financial services industry is now hanging in the balance.
All depends on the divorce between Europe and Britain, the latter’s ability to retain access to the European free market, and cope with the volatility that has seen sterling nosedive against major global currencies.
The mood in the restaurants and coffee shops in the high-rise banking hub of Canary Wharf, home to JPMorgan , Citi , HSBC and Barclays , was sober and contemplative, with job security fears rising to levels unseen since the 2008 financial crisis.
Investment banks have already warned they could move thousands of jobs if Britain opts out of the EU, while the European Central Bank has signaled it could force euro trading out of London, the world’s largest foreign exchange market.
Some sought to play down fears of a catastrophic hit to Britain’s banking sector, pointing to extensive contingency planning and many years of experience navigating crises.
Goldman Sachs Chairman Lloyd Blankfein and Jes Staley, CEO of Barclays – which suffered the biggest one-day fall in its share price on record today – said their banks had long histories of adapting to change and would work with relevant authorities as the terms of the exit become clear.
HSBC Chairman Douglas Flint said the day marked a new era for Britain and British business, describing work to establish fresh terms of trade with European and global partners “as complex and time consuming”.
Wall Street bank Morgan Stanley said the significance of the decision would not be known for some time.
A person familiar with the matter earlier said the bank could move roughly 1,000 of its 6,000 employees currently in Britain to elsewhere in Europe if Britain quit the EU.
Jamie Dimon, CEO of rival JPMorgan , told staffers his bank may need to make changes to its European legal entity structure and the location of some roles to comply with new laws, casting a pall over its 16,000 strong workforce.
In Britain’s second-largest financial hub of Edinburgh, the referendum result sparked talk the city could benefit from the relocation of firms that currently use London as the gateway to Europe.
“I am already hearing rumors from contacts in London that big financial companies are instructing lawyers to look at Edinburgh as a hub,” said Gordon MacIntyre-Kemp, chief executive of Business for Scotland, adding he expected a fresh Scottish independence vote by 2020.
Nearly two-thirds of voters in Scotland wanted to stay in the EU, and Scottish First Minister Nicola Sturgeon said on Friday a second independence referendum is highly likely. A referendum held in 2014 was narrowly defeated.
However, the City of London Corporation, which oversees the capital’s financial district, said the leave vote should not lead to a major exodus.
“There will be no mass exit of banks and financial institutions from the Square Mile,” Mark Boleat, policy chairman for the City of London Corporation, said in a statement.
The British Bankers’ Association Chief Executive Anthony Browne moved to reassure people that banks across the country would be operating as normal tomorrow.
“People will be able to take money out of cash machines,” he said.