Activist hedge fund ValueAct acquires 1.98% stake in Morgan Stanley for $1.1bn
Morgan Stanley could most likely move these jobs to Frankfurt as it already has a trading licence there Reuters

Both Morgan Stanley and Citigroup are said to shift some of its UK jobs outside the country following Brexit. The American banks are said to have already identified many of these roles that will need a shift, unnamed sources involved in the process told Reuters.

Morgan Stanley currently has most of its European staff in the UK, employing around 6,000 people. The staff, currently serve clients across the European Union (EU) by relying on EU passporting rights, a provision the UK could lose after Brexit.

Post Brexit, all banks could be required to have a licensed entity in the new regional bloc that excludes the UK. Moreover, new rules may require many business verticals such as trading European securities to be carried out in these new licensed entities. Hence, Morgan Stanley is expected to move up to 1,000 UK jobs.

One source said Morgan Stanley could most likely move these jobs to Frankfurt as it already has a trading licence there.

"We don't like Frankfurt but that's the only place to go. Culturally, it's not a vibrant city," the source explained. The source added it could not shift the staff to locations such as Ireland and Spain as US regulators were expected to discourage American banks from moving to countries with a poor country credit rating.

Citigroup, on the other hand is said to be in a better position when compared to other American banks. This is because it has about 60% of its European headcount based outside the UK. Moreover, it is said to already have a large banking unit in the Irish capital Dublin, which is regulated by the European Central Bank. Hence, it is expected to shift a much lower proportion of about 100 jobs.

Both the firms are understood to shift employees working in their respective sales and trading businesses. Additionally, Morgan Stanley is expected to shift staff working across risk management, legal and compliance verticals as well.

This follows Morgan Stanley president Colm Kelleher warning in September 2016 that the UK's decision to leave the European Union (EU) will affect the UK capital. "I do believe, and I said prior to the referendum, that the City of London will suffer as a result of Brexit.... The issue is how much," Kelleher had then said.

Many other financial firms too have said they could move jobs amid the Brexit vote. For instance, HSBC revealed similar plans as recently as on Wednesday (18 January). Speaking at the World Economic Forum in Davos, HSBC CEO Stuart Gulliver said that a fifth of London staff may be moved to Paris after Brexit.

Commenting on the latest news, a Morgan Stanley spokesman said the bank had not yet taken any decision with regard to its Brexit plans. "Our focus is on ensuring that we can continue to service our clients whatever the Brexit outcome. To that end, we continue to evaluate what changes we may need to make to our business," he was quoted as saying by Reuters.

Meanwhile, a Citigroup spokeswoman declined to comment.