Morning Coffee: Investment banks activating plans to move jobs out of London. Morgan Stanley’s mixed message
Right then, Theresa May has outlined her plans for a very hard Brexit. Conveniently enough, a lot of the senior bankers that matter are gathered at Davos, and have taken the opportunity to tell her what they think.
Except, there’s an eerily familiar feel to their reactions. City figures are cautiously welcoming May’s plans to phase the UK’s exit from the European Union and the increased clarity on Brexit plans. But the hardline stance on lack of single market access pretty much means that banks’ contingency plans that have been delicately poised on ice will be rolled out sooner rather than later.
“If you don’t know where you are going, you have to plan for the worst and execute faster," HSBC chairman Douglas Flint told Bloomberg. "This isn’t rocket science.”
“Activities specifically covered by EU legislation will move, and looking at our own numbers, that’s about 20 percent of revenue,” he added.
Morgan Stanley said that it’s most likely going to have to kick-start a new European office in either Frankfurt or Dublin. UBS has already started the move, and Citi and Credit Suisse were switching jobs out of London anyway.
But if you think Brexit means ‘just’ the loss of 80,000 or so banking jobs from London, it’s worth remembering the whole house of cards/Jenga theory when it comes to selectively removing functions from the City.
"The harder the Brexit, the faster and stronger the erosion of London’s position as a financial services center," Blair Adams, a partner with DMH Stallard, a London-based law firm that represents hedge funds and other investment companies told Bloomberg.
Separately, after a great final quarter Morgan Stanley is optimistic for 2017. Or at least more optimistic than it was at the beginning of last year.
“Going into 2017, the market sentiment is clearly more optimistic than we were going into 2016,” CFO Jonathan Pruzan told Bloomberg. “The tone is better, all the markets are open and constructive, which is not where we were last year. So from a sales and trading perspective, we continue to see good levels of activity.”
But Pruzan clearly wasn’t on the same page as CEO James Gorman. As we’ve pointed to already, Morgan Stanley isn’t about to reverse the cuts it made in fixed income and Gorman’s jubilant statements about doing more with less has been replaced with a more cautious tone.
“There’s no point getting ahead of ourselves,” he said during yesterday’s conference call.
Meanwhile:
Only 10% of Deutsche Bankers will receive a bonus this year (New York Post)
Anthony Scaramucci is free to join Trump (Business Insider)
He believes Trump has the “best political instincts of his generation of politicians.” (Bloomberg)
Deutsche Bank’s global head of sales, Jonny Potter, has left (Business Insider)
Fintech firms that help banks monitor trader chatter are staffing up (Financial News)
Deutsche Bank has settled the DoJ fine at $7.2bn (Bloomberg)
“I do think employment in finance will decrease and those people working in the industry will be doing very different kinds of jobs” (Financial Times)
Blockchain could save investment banks $8bn a year, or 30% of costs, according to Accenture (Business Insider)
John Daly, Goldman Sachs’ chairman of equity capital markets, has retired after 28 years at the bank (Bloomberg)
Tidjane Thiam has said that Credit Suisse will make more cuts, but “it’s not that material” (Bloomberg)
Ex-UK foreign secretary William Hague is helping Citi navigate Brexit (Sky)
Women dominate the ranks….in corporate governance (New York Times)
France is encouraging its citizens not to use washing machines or printers in a bid to save electricity (Bloomberg)
If you carry more “education genes” you’re less likely to breed (Guardian)
Contact: pclarke@efinancialcareers.com
