Banks uncertain about May’s Brexit vision

British Prime Minister Theresa May makes the case for a "global" Britain at WEF Davos Keystone

Just as British Prime Minister Theresa May confidently announced at WEF that Britain will continue to attract foreign investment in the post-Brexit world, some banks - including UBS - are making noises about reducing their footprint in the country.

“Britain is, and always will be open for business,” May told delegates in Davos on Thursday. Britain will become a more confident country, in charge of its own destiny after leaving the EU, she added. And this will open to the door to a new “global Britain” that can take better advantage of international opportunities.

But UBS chairman Axel Weber struck a less confident note in a BBC interview in Davos. He said that 1,000 of the 5,000 jobs the bank has in the country are directly affected by the European Union ‘passporting’. This is an arrangement that allows bankers from one EU country to trade all over the European bloc.

The details of Britain’s divorce from the EU are not yet known, but it could conceivably involve the loss of this EU passport, making London a less attractive financial centre. For Swiss banks, this is particularly relevant, as Switzerland is not part of the EU and relies on obtaining its passport via operations in EU states.

UBS is looking at various options for the 1,000 affected employees in Britain, Weber told the BBC. “For them we have to look at how the ultimate [Brexit] will be mapped out,” he said.

HSBC has already confirmed plans to move 1,000 staff to Paris and there are rumours that Goldman Sachs is also exploring such options.

Earlier this month private bank Edmond de Rothschild said it would move parts of its asset management business from London to EU countries to achieve “greater focus”. However, the bank will not pull out of London altogether.

And doubts over London’s attractiveness has also infected real estate investors, according to a survey from the European Association for Investors in Non-Listed Real Estate Vehicles (INREV).

Post-Brexit London has dropped from first to fourth most coveted city for those with anough cash to invest in office space this year.

This from IPE Real Estate, a publication that monitors property developments, and which attended an INREV roadshow in London.

“Eric Byrne, head of global multi-manager and securities at UBS, told delegates that City of London offices would be avoided by the investor in the short to medium term as a consequence of the UK’s Brexit negotiations.”