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Goldman warns of Brexit restructuring

Laura Noonan and Ben McLannahan
Goldman Sachs hints at Brexit restructuring

Goldman Sachs has said the UK's vote to leave the EU could force it to "restructure" some of its UK operations, in one of the clearest signs from a major Wall Street institution that is preparing specific measures following the landmark vote.

In a US regulatory filing on Thursday, Goldman — which employs about 5,500 people in the UK — said the Brexit decision "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".

A New York-based spokesman declined to comment on what form the restructuring might take or how advanced planning was at the bank, which recently hired former EU chief José Manuel Barroso as chairman of its London-based subsidiary.

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However, its 10-Q regulatory filing was more specific than that of Morgan Stanley, which acknowledged that while there were "several alternative models of relationship that the UK might seek to negotiate with the EU", it would "continue to evaluate various courses of action".

Before the EU referendum, Morgan Stanley had warned that 1,000 of its London jobs could be relocated in the event of a vote to leave, although it later denied it had plans to move staff to Dublin or Frankfurt.

Most banks have been working on the basis that Brexit means their London operations will lose the EU "passports" that they use to do business across the 28-country bloc, but this will not be confirmed until years-long negotiations between Downing Street and Brussels are completed.

Christopher Furlong | Getty Images

Loss of passporting could force them to set up new subsidiaries in EU countries that would carry out trading and other regulated activities between the banks and their European clients.

In the run-up to the UK vote in June, banks including JPMorgan and HSBC suggested that Brexit could result in the loss or relocation of thousands of EU jobs. Since then, most have toned down the rhetoric as they await the outcome of the UK/EU negotiations.

In its filing, Goldman Sachs stressed that "the timing and the outcome" of these negotiations are "both highly uncertain".

Bill Michael, head of banking at KPMG in London, said all the banks he advises felt the talks were crucial. "I've never seen the sector as united as it was now, not even during the financial crisis," he said. "If we move away from where we are now significantly, it has a significant impact on all of their businesses."

A senior London-based executive at a top Wall Street bank said it would be "irresponsible" for him not to consider the loss of his EU passport as his "base case", but that his bank will not start making concrete plans for the future until the political situation is clearer.

Maintaining access to the single market was one of the key issues cited by the City earlier this week in a wide-ranging manifesto on its post-Brexit priorities.

A senior banker at one of Wall Street's top banks said his bank could still serve UK and European clients "regardless of what happens" "We could execute solutions on the continent, we could execute in the UK," he said, adding that his unit has "not rejigged any headcount" yet.

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