Citigroup's Brexit strategy is a model for other banks
Cit seems to be ahead of the curve on Brexit. While other banks (Goldman Sachs) continue to insist that Brexit is merely a matter for contingency planning, Citi is going out there and doing something about it.
Bloomberg reports that Citi is, 'considering moving some of its London-based equity and interest-rate derivatives traders to Frankfurt after Brexit is triggered'. The bank is already said to be in discussion with German regulators about gaining the necessary approvals.
This follows an earlier report in the Sunday Times saying that Citi is moving 900 jobs from London to Dublin in preparation for Brexit.
It's not clear which jobs Citi plans to move to Dublin, but given that the U.S. bank has an operations training academy and its retail banking headquarters in the Irish city, it seems fair to assume that any jobs moved to Ireland will be predominantly in the middle and back office. Frankfurt, on the other hand, seems to be getting the front office sales and trading jobs.
Meanwhile, at a conference last week, Michael Lavelle, Citi's UK and Ireland head of corporate and investment banking and EMEA vice chairman of corporate and investment banking, said Brexit would have a limited impact, and that the bank is moving some jobs to lower cost centres anyway.
So, front office IBD jobs in London? Middle and back office jobs in Dublin? And sales and trading in Frankfurt? If this is Citi's model, it's one other banks might want to follow. As the chart below from Boston Consulting Group (BCG) shows, equity derivatives, rates and credit are the trading jobs considered most likely to move overseas.
Notably, very few of Citi's London equity derivatives professionals are British anyway. Jean Luc Bernardi, head of equity structuring is French. David Haldane, Citi's global head of derivative trading, is Australian, and Dirk Keijer, the head of equity derivative sales Citi poached from Goldman in March, was educated in the U.S. but sounds distinctly Dutch.
There's good reason to move to Frankfurt. Bankers who work there already sing Frankfurt's praises and our calculations suggest banking pay is higher in the German city when adjusted for costs. One Citi equity derivatives junior told us he'd have no compunction about moving if required: "I'm happy to move anywhere, as long as the terms are fine."
BCG's guide to the jobs that will and won't leave the UK post-Brexit: