Big investment banks with their European headquarters in London will start the process of moving jobs from the UK within weeks of the government triggering Brexit, a faster timeline than their public messages of patience would imply, according to people briefed on the plans being drawn up by four of the biggest firms.

Dismayed by the lack of a clear plan to protect the UK’s status as a global financial hub, executives are planning for the worst – that they will lose the right to sell services freely around the EU from the City, said the people, who asked not to be identified because the plans were private.

Facing a long process with potential waits for regulatory approvals before workers can pack their bags, banks want to start quickly in order to have new or expanded offices set up in Europe before the end of the two-year Brexit negotiation period.

“This year is all about understanding potential scenarios, your options and what your contingency plans are,” said Andrew Gray, head of Brexit for UK financial services at PwC, which is advising banks on how best to respond to Brexit. “Some plans will take time to execute, and firms can’t afford to wait until January 1, 2019, and risk not being able to do business.”

Discouraging talks

While UK Prime Minister Theresa May has said she will fight for the City of London to retain its passporting rights, bankers and lawyers say she faces an uphill battle trying to win concessions from EU partners still smarting from the outcome of the June 23 vote. Bank executives were privately discouraged that seven weeks after the referendum, the ministers in charge of negotiating the best deal for the UK believe they could retain the benefits of being in the single market without accepting the free movement of EU citizens, the people said.

Given the limited number of suitable destinations to relocate operations, and the shortage of prime real estate in those cities, banks are in a race against each other to secure the best office space and accommodation for the thousands of workers they would eventually move from the UK. They also want to be first in the queue with the local regulator, which is likely to struggle to cope with an influx of investment banks asking permission set up shop.

The possibility that London is cut off from the rest of the 27-nation bloc is a particularly acute problem for Wall Street banks as a significant amount of the revenue they generate in the region comes from serving EU clients. Eighty-seven percent of US investment banks’ EU staff are located in the UK, which is also home to 78% of the region’s capital markets activity, according to New Financial, a think-tank.

Avoiding logjams

Before the referendum, JPMorgan Chase & Co CEO Jamie Dimon said he would relocate as many as 4,000 employees to the continent after Brexit. Morgan Stanley may move as many as 1,000 employees out of the UK, while Goldman Sachs Group and Citigroup indicated they would also shift people abroad. European banks, including HSBC Holdings and Deutsche Bank, said they may had to move people or activities to France and Germany.

Since the vote, bank bosses have struck a softer note in public, saying that they would wait and see how the UK’s negotiations with the EU panned out before making any decisions on the number of employees or timing.

To be sure, beginning the process would not mean employees would immediately start moving, the people said. The first steps would involve setting up a new legal entity structure with a home base inside the EU, applying to the local regulator for a banking licence and getting approval for the internal models they use to calculate their capital requirements, a process which can take takes years on its own.

To avoid any logjam with local regulators, the banks would need to co-ordinate with one another on where and when they were planning to move staff, said one of the people. Those discussions could be facilitated by one of the industry lobby groups such as TheCityUK, the person said.

Banks could yet delay their departure from the UK if the British government was able to secure a lengthy transition period from the current rules to whatever fresh terms of trade were agreed with the EU, said the people. That would need to be agreed before the UK actually triggered Article 50. (Bloomberg)

•Photo shows UK Prime Minister Theresa May.

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