It is very unlikely that large UK banks would move lock, stock and deposit account out of the UK if, as part of the Brexit negotiations, they lose so-called “passporting rights”.
The latter allows them to sell their services anywhere in the European Union and wider European Economic Area (EEA) without being based in those countries and while still being regulated by the UK authorities.
The British Bankers’ Association (BBA) is being measured – not to say, creatively ambiguous – on the issue. Anthony Browne, chief executive of the BBA, clearly wants to exert some pressure on the UK government in its Brexit negotiations.
But what is the trade body actually implying? Little more than that large and smaller banks are considering moving some operations to the EU if passporting/the single market are irrevocably lost to us as part of the UK refusing in any “hard Brexit” to back down on free movement of people, a bedrock tenet of the EU.
Moving some operations, and perhaps increasing some recruitment overseas, while soft-pedalling somewhat on hiring in the UK.
Well, a bank that makes money from providing international services would be derelict in its duty if it did not consider the options to anticipate a potentially game-changing event for it. Project teams have apparently been set up for contingency planning. What did we expect, an ostrich head in the sand approach instead?
But just as Browne makes the point that barriers to free trade in banking would hurt Europe as much as the UK – rearrange nose, bite and face into a well‑known saying – it is also true that our banks would stand to lose as much as they gained from a seismic shift of domicile across the Channel.
The BBA is not scare-mongering; but what is being said is not scarily unexpected, either.