Thursday, January 19, 2017
REPORT: Goldman Sachs could cut 3,000 London jobs over Brexit
LONDON – Goldman Sachs is considering cutting its staffing numbers in London by up to 50%, according to a report in German newspaper Handelsblatt.
The paper reports that the bank is planning to shift 1,000 people to Frankfurt and set up a new European subsidiary as it prepares for the UK to leave the European Union. Goldman is also reportedly considering moving operations staff to Warsaw and New York, reducing the number of people in London by 3,000, Handelsblatt said.
The 3,000 estimate, which would half the bank's UK headcount, is higher than the previously floated figure of 2,000 job re-locations.
A spokesman for Goldman Sachs in London told Business Insider: "We continue to work through all possible implications of the Brexit vote. There remain numerous uncertainties as to what the Brexit negotiations will yield in terms of an operating framework for the banking industry. As a result, we have not taken any decisions as to what our eventual response will be."
On Tuesday, Prime Minister Theresa May outlined her negotiating stance for Brexit, which included a rejection of the single market and an end to the free movement of people, resulting in a so-called "Hard Brexit." This would likely have the result of stripping the City of its passport.
Passporting rights allow UK-based financial firms to access clients across the continent via branches. If this regime ends in Britain, banks will have to relocate operations to countries that do have passporting rights and many international firms are readying plans to counter their loss.
A steady flow of international banks have announced plans to move employees out of London since May's speech. Jamie Dimon, CEO of JPMorgan Chase, told Bloomberg Television on Wednesday that the bank will likely move more people than previously thought. "It looks like there will be more job movement than we hoped for," Dimon said.
HSBC CEO Stuart Gulliver said bankers generating around a fifth of HSBC's London revenue will move to Europe as a result of Brexit. "Specifically what will happen is those activities covered specifically by European financial regulation will need to move, looking at our own numbers – that’s about 20% of the revenue," Gulliver told Bloomberg in an interview at the World Economic Forum in Davos.
Gulliver said around 1,000 bankers in HSBC's investment banking and markets divisions would "probably need, in our case, to go to France."
UBS' investment bank chief Andrea Orcel also warned in an interview with Bloomberg at Davos that jobs "will definitely" move as a result of Brexit.
London's 328-year old insurance market, Lloyd's of London, is a planning to move some of its operations to the continent in reaction to the UK's Brexit vote.
Despite possible job cuts, Goldman is clearly committed to London and is currently constructing a £350 million, 850,000 square foot headquarters in London's Holborn area.