rahulsidhu wrote:ldev wrote:London will continue to do well in FX trading, all pairs/currencies, but inspite of the huge volumes, that business has wafer thin margins. It will lose it's status as a Euro Clearing Center for Euro securities, because the ECB does not want any euro clearing done outside the Eurozone. (Quite a contrast to the PBOC ) it will lose it's EU passport access which in practical terms means teams of securities salespersons servicing all of the EU but based in London. Other cities such as Dublin and Frankfurt will pick up some jobs as a result, but there will not be any massive build up of either place as an alternative.
Yes, this is pretty much accurate.
One thing to understand is that all these big businesses - be it banks, clearinghouses, money managers - are shape shifters. They have multiple entities across domiciles and the usual response to any change in laws is to pay lip service to it but quietly change entity structure, for instance which entity's name to trade under. This involves a lot of lawyerly work but rarely a physical shift of employees.
A physical shift happens when either the laws leave them with no choice (and many European/UK laws were lately being framed to leave them no choice) or when there is a strategic priority, for instance HSBC considering moving headquarters to Asia. Or a combination of the two.
As things stand, banks had already been considering moving physical locations to Dublin or continental Europe because of the UK bank levy. Brexit will only add weight to that move. I think Paris and Dublin will be the winners but even they will not win in any big way. European financial industry is only a shadow of its formal self.
The UK will then be exporting less financial services to Europe. Will it be making more cars or steel to compensate? It sounds very difficult in these times of overcapacity. So my overall analysis is it was a bad move for the UK, economically speaking. Of course there are other dimensions.
What happens to HSBC in event of Ireland going Greece way or for that matter next financial crisis in HK China? ..who will bail out its 2 trillion balance sheet ? Dublin someone must be joking here..ECB or China? Do you really think big banks will go to tiny nations just to be in EU? Think
Again..you reckon HSBC will be fine in land of dragon lol.. Even even they knew they were bluffing and merely wants UK to reduce the levy and keep more profit..