Major American investment banks seek to stay calm amid Brexit woes. Goldman Sachs, Bank of America, JP Morgan, and Morgan Stanley are among the top Wall Street firms that issued a statement pledging to help the United Kingdom keep London as a major financial center.
These banks, CNN Money portrays, use London as a gateway to Europe for banking, asset management, and insurance operations.
However, the risk is that the EU will not give Britain a break and that, in order to sell in Europe, banks will need to locate to one of the remaining 27 EU member states.
That could be good news for financial centers such as Frankfurt and Paris, while affecting negatively London and the rest of United Kingdom’s economy. In the UK, financial services industry accounts for 7% of jobs and 12% of economy.
The EU officials have also stated that they’ll look to bring back from London to Europe trillions of dollars in transactions if the UK decides to become an offshore financial center.
“A sizable portion of activity in Britain’s financial sector is likely to be repatriated across different parts of the EU,” claims Karthik Sankaran, a strategy director at Eurasia Group.
London still has its own advantages including liquid markets and highly skilled workforce. What’s more, London is a foreign exchange leader as well as a center for Islamic finance. In recent years, the city has also become one of the major hubs for Renminbi transactions.