US bank Citigroup is set to become the latest Wall Street bank to pick German financial hub Frankfurt as its European Union base this week in preparation for when Britain leaves the 28-nation bloc.Citigroup’s move to Frankfurt was part of a plan to be present to its board of directors this week for approval, according to a person with knowledge of the decision and cited by British TV channel Sky News late on Monday.
The US bank has so far declined to comment on such plans. It had earlier said it would choose Frankfurt to become its hub for sales and trading in the EU and move “a couple of hundred” jobs outside of London after Brexit.
Even as the chance remains for a Brexit deal maintaining some sort of access to the single market, banks are preparing for a “hard Brexit,” meaning no or reduced access. Therefore, they want to have new or expanded offices up and running inside the bloc before the UK formally departs in 2019.
Financial services firms need a regulated subsidiary in an EU country to offer products across the bloc, which could prompt some to move jobs out of Britain.
Jim Cowles, the bank’s top executive for the region, said at a Dublin conference in January that Citi was evaluating locations in Ireland, Spain, Italy, Germany, France, and the Netherlands,
The Association of Foreign Banks in Germany has estimated that bank relocations from London could create 3,000 to 5,000 new jobs in Frankfurt over the next two years as a result of Brexit. Deutsche Bank, BNP Paribas, Barclays and Bank of America are among the banks contemplating shifting some operations after Brexit.
uhe/tr (Reuters, Bloomberg)