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City of London ponders its post-Brexit options

Uncertainty continues to cloud the future of the U.K. financial services industry as it assesses how to continue working once the country -- and with it the City of London -- leaves the European Union.

The decision to leave the EU has been a headache for the City as it could lose the so-called "passporting rights" – the possibility to sell and trade in euros and across Europe while only overseen by U.K. authorities.

Several EU representatives, including President Francois Hollande of France, have said that the euro-clearing business could only happen in the EU and overseen by the European Central Bank - which would mean that London would lose a significant part of its financial business.

Reports in The Times over the weekend suggested that Citigroup, which manages $1.8 trillion assets, was planning to send 900 employees from London to Dublin to continue operating in Europe.

Last week, news emerged that also Goldman Sachs was considering moving some assets and operations from London to Frankfurt. In both scenarios, the investment banks would be under the ECB's supervision once Britain officially exits from the EU and could continue their euro-operations.

"We are looking at our options obviously," a spokesperson for Citigroup told CNBC on Monday over the phone. "But we are not looking for space in Dublin and we are not moving 900 people there," the spokesperson added, denying the Times report.

However, the worries across the financial services industry are clear and the future of the City is not looking bright.


Skyline of London
Simon Dawson | Bloomberg | Getty Images
Skyline of London

A report commissioned by the London Stock Exchange and seen by the Financial Times warned Monday that 83,000 jobs could disappear over the next seven years if the City loses its euro-dominated clearing.

In the worse post-Brexit scenario, 31,000 jobs in "core intermediaries" of financial institutions would vanish. In related areas, another 18,000 could also go in legal and accounting services; 15,000 in wealth and asset management and 12,000 in technology.

Amid the unclear future for the City, the industry has been pressuring the U.K. government to specify its Brexit plans.

Sir Howard Davies, chairman of the Royal Bank of Scotland, said over the weekend that banks needed to see transitional plans from Number 10 or they would have to make decisions based on uncertainty.

"I think it is damaging if we don't get a transitional deal because I think you will then see banks and financial institutions making decisions on the basis of uncertainty," Davies told ITV's "Peston on Sunday".

He added that banks "will not wait" because they have to make a decision in the event of a hard Brexit, where British firms would lose access to the EU's single market.

"So they will not sit back, they are currently making contingency plans and once you've got a contingency plan – hey, there is a risk you might implement it one day," the chairman of RBS said.

Click here to read The Times and Financial Times reports.

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