Global investment banks, who have long coveted an operational presence in London, are contemplating moving operations from Europe's financial capital to elsewhere within the continent, following the UK's vote to exit the EU.
The British Government is yet to trigger Article 50 of the EU constitution, signalling its intent to leave the bloc. Should it occur, subsequent talks between it and the European commission could last as long as two years.
Amid concerns over market uncertainty, the primary concern for global banks is their access to the European banking passport system. This is the mechanism which allows financial institutions authorised to do business in one member state of the EU, or the wider European Economic Area (EEA), to carry on their trade across the region.
So far, EU officials insist that, in order for the UK to keep its current level of market access, the government would need to agree to free movement of labour. It would be a concession that those within the 'Leave' camp in the UK would find politically unpalatable."
Who might be impacted by the loss of European banking passport availability, and by how much, also varies, commentators say. For instance, major European banks, including but not limited to ING, BNP Paribas and Deutsche Bank – while expressing their dismay at a potential Brexit on the horizon – say they can avail the banking passport via connections to their respective home markets namely the Netherlands, France and Germany.
Societe Generale, another French bank with a major presence in London, confirmed to IBTimes UK that it had no plans to give up on the UK market. In 2014, the French banking major agreed on a pre-let of around 280,000sq ft, in a new 700,000sq ft office building being constructed in Canary Wharf, London.
A senior source says the plans are going ahead. "Of course, we are disappointed with the referendum outcome. However, it is an outcome that we respect. We have been in the UK since 1871 and have no intention of giving up on London which remains an important market for us."
While European banks ironically are not that spooked by the spectre of a Brexit, US and UK banks are anything but. For instance, senior executives from Goldman Sachs and Morgan Stanley claim that both banks are scouting for locations in Frankfurt as part of routine contingency planning, should the UK government fail to get the right deal for London. That's not what the corporate response is.
A spokesperson for Morgan Stanley said: "Such claims are factually incorrect. We would consider an adjustment to our operating model in Europe, Middle East and Africa (EMEA) only when the full impact of the referendum outcome becomes clear."
The investment bank also denied reports it was going to move 2,000 jobs from London.
Goldman for its part also rebuffed speculation. "We have not made any changes to our real estate requirements in Frankfurt as a result of the referendum result. There is no immediate change to the way we conduct our business or where we conduct our business."
British banks appear to be most jittery, with the exception of the Asia-focused Standard Chartered bank which has confirmed it would not be moving any UK staff. Recent rumours have surrounded HSBC – with reports suggesting it could move as many as 1,000 jobs to Paris – but the bank has declined comment.
Others, including RBS and Lloyds Bank have also declined comment on their respective plans, while Barclays said it has no plans to move jobs out of the UK. However, lobby groups Confederation of British Industry and Institute of Directors have clung on to their dire pre-referendum forecasts of job losses in the financial services sector.
A pre-Brexit vote assessment by the CBI and PricewaterhouseCoopers said that as many as 100,000 jobs could go in the financial services sector, a view shared by many delegates at the British Bankers' Association's annual retail banking conference on Wednesday (29 June).
Contrary to public perception Frankfurt, as opposed to Paris, emerged as a more popular contingency destination. However, the German finance hub is dwarfed by the sector's sheer scale of manpower in London. As of 31 December, 2015, data indicates that 559,800 people were working in the City of London and Canary Wharf.
That is more than three quarters of Frankfurt's entire population, according to the last available census. Neither moving professionals nor convincing those used to a life in London to move would be easy, senior bankers say. Furthermore, most admit, whether Frankfurt or Paris, neither solution beats London in terms of attracting talent and ease of conducting financial services.
The city tops the latest Global Financial Centres Index (GFCI), which ranks competitiveness within the sector. It is followed by New York and Singapore and its nearest European rival, Zurich, comes in sixth. The Swiss financial hub is not in the European Union either. It too is involved in Switzerland's wrangles with the EU, after the country voted to end its freedom of labour agreement under European Economic Area auspices with the bloc earlier this year.
By contrast, EU rivals Frankfurt, Dublin, Paris and Amsterdam languish in 18th, 29th, 32nd and 34th places respectively on the GFCI. Yet, the sector is bracing itself for months, perhaps years, of wrangling over London's financial clout post-Brexit and UK job losses are inevitable.
London is likely to be poorer as a result, and by default the financial services world will be as well. To quote one senior banker, "This is uncertainty we did not need; these are questions we needn't have asked; and it's a problem we could have done without in the current climate."