As the Brexit date is approaching, British banks have been advised to draft a plan on how they are going to cope with the staffing and operations in the new basis to be opened in the European Union. According to Reuters, a shift in banking jobs in Britain is expected and may rise significantly from 3,5k to 12k in the short term. For now, the banks that have applied for licenses to expand their business or open new bases in the euro zone are operating their new hubs with minimum staff with an aim to make additional strategic decisions later as March 2019 will approach.
The European Central Bank will focus on local management capabilities, access to market infrastructure, trading capabilities, provision on accurate data on local activities and not allowing full reliance on hedging and booking strategies outside the European Union, in order to avert British banks making token offices. In addition, the banks that wish to operate in the EU are responsible to provide early assurance and proposals of the actual business structure plans for the next few years.
In addition, BoE Deputy Governor, Sam Woods, does not see the number of 10,000 to 12,000 jobs moving from the UK as significant and believes that the job move will strongly depend on the agreement between the EU and the UK on the proposals for trading relations in financial services, and he hopes that both sides will come together in the agreement.
Barclay’s Chairman, John McFarlane in his interview with Reuters has stated that the he believes Britain’s banking industry will arise largely unharmed by Brexit and that there will not be a terminal damage in the long run. The disagrees with some politicians and bankers on the fears of the trading relationship with the EU proposed by the British Prime Minister would damage the job creation and influence London’s decline as a global financial center and believes that London will remain Europe’s primary financial services hub.
Looking at the macro economic news for Wednesday, Germany’s business confidence came at 101.7, down from 101.8 in the previous month, according to the Munich based Ifo economic institute. Once again, the business confidence has been influenced by the threat of US tariffs on cars and car parts, and the expectations for the next 6 months have worsened, as the trade disputes are influencing the corporate sector. The mood among the investors have fallen to its lowest since August 2012 and export expectations in the automotive industry have fallen significantly.
ECONOMIC CALENDAR EVENTS FOR JULY 26th
EUR German GfK Consumer Climate
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EUR ECB Press Conference
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USD Unemployment Claims