US banks are shifting their senior hiring away from London and towards Frankfurt and Paris after the UK’s decision to leave the EU, research by headhunters shows.
DHR International, the sixth-largest executive search company, said some institutions are also using Brexit as a “handy excuse” to move middle and back office jobs from London to a cheaper location.
Brexit has profound implications for City jobs because 5,500 financial services companies that use London as a gateway to the EU could lose the so-called passports that give them access to the 31 countries of the European Economic Area.
City executives had warned that as many as 100,000 jobs could be lost in London because of Brexit, and recruitment bosses warned of a prolonged hiring slowdown immediately after the June 23 vote.
DHR said that overall the Brexit vote had a smaller impact on hiring than expected, but there have been some notable changes to companies’ approaches in the 100 days since the vote.
“A number of US banks have shifted their hiring for senior positions in corporate and investment banking to locations such as Paris and Frankfurt as part of the first step in expanding their presence in mainland Europe,” said Stéphane Rambosson, head of the European Financial Services practice of DHR.
“UK candidates are increasingly making it clear that they are willing to move out of London to roles elsewhere in Europe — whilst firms are instructing us to fill roles overseas that might previously have gone to London,” he added. “Both [were] almost taboo ideas a year ago.”
Financial services companies including JPMorgan, HSBC and UBS have warned they would have to move thousands of jobs from London as a result of Brexit but are deferring hard decisions until there is more clarity on the terms of the UK/EU separation.
Staff affected most directly by Brexit are those who sell to clients across the EU from London. Back and middle office functions such as administration and settlement can still be carried out in London but Mr Rambosson said those jobs are also moving out of the City.
News, comment and analysis on the UK’s decision to leave the EU
“For some Brexit is that handy excuse for getting on with the unpleasant task of moving jobs outside London,” he said. “Companies can make savings of up to 40 per cent through cutting costs by moving these roles outside of London to cities such as Warsaw, Lisbon or Dublin and Brexit has prompted plenty of organisations to bring existing plans forward.”
On a more positive note for the City, DHR found that financial services bosses have “largely ignored” get out clauses allowing them to rescind job offers if the UK voted to quit the EU.
“In the lead up to the referendum we saw a number of job offers which included a Brexit clause,” Mr Rambosson said, referencing a clause allowing employers to abandon job offers in the event of an out vote. “Now that the vote has passed these clauses have largely been ignored. ”
Mr Rambosson said financial services companies are also resuming job searches that had been put on hold pending the outcome of the vote.