How banks AREN’T worried about Brexit: Shock data suggests bankers seem ready for exit

The Brexit deadline is just five weeks away, and new Prime Minister Boris Johnson and the EU are already in a stalemate, as neither wants to budge to meet the other. This could result in a no-deal Brexit, and today Michael Gove is chairing the first daily meeting of the new no-deal Cabinet committee. Banks are already preparing for this eventuality it seems, as data suggests many have preparations in place.

Bank of America is setting up a new Paris office and will move around 200 London sales and support staff to the newly refurbished offices ahead of Brexit.

One European chief executive of a US investment bank said: “London would have been the natural choice to hire new bankers.

“Now, after the investment we’ve made in Europe, if someone leaves in the UK or we want to recruit someone, we’re just as likely to base them in Frankfurt or Paris.”

Estimates of jobs being transferred to other European countries rather than the UK are in their thousands.

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In the midst of this, the Bank of England has said British banks hold enough capital to cope with a no-deal Brexit and a global trade war simultaneously.

However, a disruptive Brexit would still cause major turbulence for financial markets and the economy.

Bank of England Governor Mark Carney also noted ongoing concerns about illiquid investment funds, liquidity shocks, crypto-currencies and environmental dangers at a half-yearly update on the risks facing Britain’s banking system.

Mr Carney said while banks were well prepared for Brexit, this did not mean the economy would be unscathed if Britain left the European Union on October 31 without a transition deal, something both contenders to be the next prime minister say is possible.

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He told a news conference: “Financial stability is not the same as market stability.

“In a disorderly Brexit, a range of UK asset prices would be expected to adjust sharply, tightening financial conditions for UK households and businesses.”

The BoE noted a sharp fall in foreign investors buying British commercial property and some company loans.

Mr Carney said: “There has been a deterioration in the quality of inflows … that are financing the current account deficit.”

He added that it was crucial Britain remained an attractive investment destination after Brexit.

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However, despite some preparations banks aren’t moving their international lending business out of the UK.

According to the Bank for International Settlements, since the UK voted to leave the EU in 2016, the claims of banks’ UK offices on borrowers abroad have increased by a total of $250 billion (£205.42billion).

This is quite close to the average rate of growth for the past few decades.

Bloomberg’s Mark Whitehouse said: “Given the risks, why aren’t banks fleeing? One possible explanation is that there’s no need to hurry: Once they’ve prepared their offices elsewhere in Europe, it’s easy to move the assets when necessary.

“Another possibility is that bankers don’t believe the UK will actually leave, and hence aren’t really prepared.

“If so, Britain’s exit, if it happens, could prove a lot more surprising – and a lot more damaging – than it otherwise would be.”