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Thousands of London banking job cuts to start next week as contingency plans kick in

Get ready to clear your desk

If you perchance thought that your London banking job would be safe with Britain outside the European Union, you were seemingly wrong. Consultants working for leading strategy firms in London say banks have activated their contingency plans and that the London job cuts are about to come thick and fast.

"You're looking at anything from 50,000 to 70,000 London finance jobs being moved overseas in the next 12 months," predicts one consultant working with one of the top finance strategy firms in the City. "Jobs are going to be cut, and those cuts are going to start next week."

Campaigning organization, TheCityUK estimated that there were 729,000 finance and finance related jobs in London in 2015, of which 143,600 were in banking.

Jamie Dimon already sent a memo to J.P. Morgan staff in London saying that the US bank, "may need to make changes to our European legal entity structure and the location of some roles." The consultant suggested this is an understatement: "J.P. Morgan has just let four buildings in Madrid and six buildings in Frankfurt. All the banks have been planning this for weeks. At 7.30am this morning, their contingency plans kicked in."

Dimon said previously that 4,000 of J.P. Morgan's 16,000 UK jobs could move overseas if Britain leaves the European Union. J.P. Morgan declined to comment.

A financial services partner at another leading strategy consulting firm, also speaking on condition of anonymity, agreed that the impact of the Brexit vote will be felt sooner rather than later in London finance circles. "These banks are going to start moving roles overseas very quickly," he said, citing one client which has made preparations to move 1,000 roles out of the City. "The impact on the London economy is going to be dire."

Chris Wheeler, banking analyst at Atlantic Equities agrees: "There are going to be a mass of finance jobs moving out of this country and they're going to move soon. Anyone who thinks J.P. Morgan or Morgan Stanley are going to wait years before moving their thousands of jobs is in cloud cuckoo land. They'll want to get uncertainty out of the way and to comply as soon as possible. This is the biggest change in London since the Big Bang."

London bankers who think they're in with a chance to move to Madrid or Dublin could be sorely disappointed. Consultants are in agreement: roles will be cut in London rather than migrated overseas. "Why would you move someone who's earning £150k in London to do a £60k job in Frankfurt," said one."Banks are going to use this as an opportunity to cut costs."

London bonuses are also likely to plummet this year, dealing a double blow to staff at European banks who've seen the value of previous years' bonus deferrals collapse. "This is just going to hammer people," says one headhunter. "If you're a banker in London now, you're going to stop spending. Cancel the nanny. Cancel the holiday. Cancel the extension."

Continental European financial centres will benefit from London's pain. "For European banks, front office jobs are going to be repatriated to the home country - wherever that bank has it's headquarters. Back and middle office jobs are a different matter," said the consultant. "There, you're looking at Dublin, Poland, or the Czech Republic."

The real question is where US banks will choose to relocate their European headquarters. Goldman Sachs has a sixth of all its employees globally in the City and is in the process of building a big new European HQ in London's Farringdon - although consultants said it's been quietly looking at subletting space in the building before it's even finished. Morgan Stanley president Colm Kelleher touted Dublin or Frankfurt as potential locations for Morgan Stanley's European HQ in future. Madrid is a new option - and a wild card, but one consultant said it's popular with bankers who will be kept on: "The senior guys are all hoping for Madrid."

As bankers in London stare over a precipice, the consultants we spoke to are doing just fine. "The emails from clients are coming right, left and centre," said one. "30 projects across different banks went live for us this morning," said the other "All the big strategy firms, McKinsey & Co. Bain, Boston Consulting are being dragged in. Everything needs to change."

Photo credit: moodboard

AUTHORSarah Butcher Global Editor
  • Po
    1 July 2016

    UK tax haven? Are you serious? How would you pay for NHS and unemployment benefits?

  • ol
    old guy
    30 June 2016

    I'm afraid that I must agree with the 'scaremongering' observations above. It is far from straightforward to recruit and train the folk necessary to replicate services and processes currently delivered in London. It's not merely a matter of scale of available talent pool (where London/NY/Singapore/HK are pretty well unparalleled), it is also the support infrastructure proximate to these folk currently located in one of these global centres: I'm talking about: accountants, lawyers, risk specialists, IT folk, contractors, etc

    Let's just look how long it has taken CS, DB, MS, etc to establish 'offshore' competency centres. Years - and typically, the range and depth of services delivered has been quite narrow/shallow.

    I understand that some folk have gone into a bit of a tail-spin since friday morning, however, I do expect logical folk in the City will get a more balanced view once they explore the practical challenges of establishing centres outside of their current home locations.

  • ma
    28 June 2016

    You need to learn the difference between 'let' and 'rent'. It's fairly basic. You misuse 'let' above.

  • Jo
    27 June 2016

    You'll feel sorry once these people leave the country and your welfare is cut due to reduced tax revenue.

  • Sa
    Sarah Butcher
    27 June 2016

    @honestjohn. Briefly, I work in an area allied to finance too and clearly hope that the scenario outlined in the article above is not one that unfolds in the months to come. However, the article reflects the comments of consultants working with banks on Friday. The comments are not recycled from elsewhere as you suggest and the journalism was not lazy. It was time-constrained, and over this week we will endeavour to offer further appraisal, some of which is likely to offer an alternative scenario for the future. Sarah

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