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London-based banks looking to pack up after Brexit could end up spending as much as £50 million ($66.5 million) to relocate to the European Union (EU), a new report says.
Estimates published by global consulting agency Synechron say banks looking to relocate 1000 roles would have to shell out, on average, £50,000 ($66,252) per employee.
The analysis considered the financial burden of hiring and redundancy, new building, infrastructure and rent costs, and well as contingencies.
Financial services are expected to consider setting up shop in European cities like Amsterdam, Dublin, Paris and Frankfurt, where they would be able to maintain passporting rights which allow financial services to do business across EU member states without needing to obtain licensing in each individual country.
"Financial 'passporting' is vital to the work many banks undertake across Europe and they will have to think carefully about which city within the EU their interests and their clients' interests will be best served," Tim Cuddeford, a London-based member of Synechron's Business Consulting Practice said, according to the report.
While incoming financial regulations like MIFID II may provide London-based banks an opportunity to still access the single market, fears of losing those passporting rights may be enough to spook London banks into leaving the U.K.
"Other cities may be just as competitive and worth considering as long as there is access to (a) similar talent pool and infrastructure," Cuddeford explained.
The analysis assumed that 65 percent of staff would relocate, while 35 percent of the workforce would be comprised of new hires.
But those cost estimates may prove to be a lower-end estimate.
Synechron's analysis doesn't take into account capitalization costs or banking licenses, given that they would vary depending on the individual firm and the requirements of each regulator.
Meanwhile, new building and rent costs could total £20.6 million alone, Synechron explained.
An additional 20 percent of the budget would need to be put aside for contingencies.