Goldman Sachs has become the latest international corporation to warn that it may “restructure” its British operations as a result of the UK’s decision to leave the European Union.
The Wall Street bank, which employs about 6,000 people in the UK, on Thursday said the Brexit vote “may adversely affect the manner in which we operate certain of our businesses in the European Union and could require us to restructure certain of our operations”.
Goldman’s warning, in a US regulatory filing, is the clearest signal yet that US banks are seriously planning to move their European operations from London so that they can continue to service the whole of the European Union when the UK formally leaves the 28-country bloc.
JP Morgan chief executive Jamie Dimon told an Italian newspaper last month that in its worst-case scenario it would “have to move some thousands of employees to other branches in the eurozone”. JP Morgan employs about 16,000 in the UK.
“The framework of the UK’s engagement with the EU, including trade agreements, will be negotiated over a period of years. For the moment, we will continue to serve our clients as usual, and our operating model in the UK remains the same,” Dimon told staff in a memo.
“In the months ahead, however, we may need to make changes to our European legal entity structure and the location of some roles. While these changes are not certain, we have to be prepared to comply with new laws as we serve our clients around the world. We will always do our best to take care of our people and do the right thing during times of change.”
Morgan Stanley, which warned before the vote that Brexit would lead to 1,000 UK jobs being relocated to the eurozone, said in its own regulatory filing that it was continuing to “evaluate various courses of action”.
US banks, which were some of the biggest donors to the Remain campaign with Goldman and JP Morgan both donating £500,000, are concerned that Britain’s exit from the European Union it will mean UK-based staff will longer have access to the “passporting” system that allows banks to sell services freely across the EU. The final effect of Brexit on passporting will not be known until the end of Downing Street’s negotiations with the EU.
According to thinktank New Financial, 87% of US investment banks’ EU staff are location in the UK.
Other big US multinational companies are also considering pulling out of the UK as a result of Brexit. Last week Ford warned it was weighing up closing factories and raising its prices in the UK. The largest car brand in Britain said the referendum decision could cost it as much as $1bn (£750m) over the next two years.
Bob Shanks, Ford’s chief financial officer, forecourt prices may have to rise to offset the drop pound as 60% of parts are imported. “We’re going to have to look more at costs,” he said. The company would find a way to “claw that back”.
Ford has two remaining manufacturing plants in the UK, in Dagenham and Bridgend. Asked if the group would shut its remaining UK manufacturing operations after Brexit, Shanks said: “Everything is going to be on the table across Europe.” Ford’s warning comes after General Motors, which owns Vauxhall, said the Brexit vote could cost it $400m this year. The boss of Peugeot-Citroën has also hinted that car prices will have to rise.
