Yellow vests show why banks are delaying Brexit moves

News and opinion on finance

The exodus from London’s financial sector is just beginning. Banks are shifting hundreds of people, and hundreds of billions of pounds in assets, into EU entities. In a no-deal Brexit scenario, these moves could accelerate rapidly. Hundreds of sales and trading staff may have to move across the Channel at short notice.

Yet mass protests since November by the gilets jaunes, or yellow vests – initially against fuel-tax rises – have shown the depth of discontent with president Emmanuel Macron and the centrist, pro-European stance that he represents in France, too. Violent clashes with police on the Champs Elysees, where most foreign banks in Paris are based, effectively burnt the red carpet laid out for bankers departing London.

These events also undermine the idea for banks of a pan-European base in Frankfurt, as France has the power to undo the entire European project much more than Britain, which was always more marginal to it. Frexit, a remote prospect today, could bring banks back to London – or, more likely, to New York – but not just from Paris.


Across Europe, certainty around EU integration is receding. Brexit started almost as a derivative of Grexit, as Greece’s brush with exiting from the euro happened the year before. Populist euro-sceptic parties have since gained power in Italy and grown in influence in Germany and Austria, and most recently in Spain.

The decision to leave the EU is to the detriment of London, but neither Frankfurt nor Paris will take up its mantle. Brexit increases the argument for spreading more European staff around the continent. But ambitious bankers will prefer to be close to the top jobs in London or New York. Their bosses, similarly, will want to move as few frontline positions as possible, to avoid costly duplications.

Banks must now double their operations in cities such as Paris and Frankfurt, perhaps involving several hundred people at the biggest firms. Thousands more could follow if EU regulators ask banks to shift control, compliance and risk functions. But banks will push back strongly against that, arguing that the client would pay.


JPMorgan, the world’s biggest bank by market capitalization, employs around 16,000 people in the UK. Chief executive Jamie Dimon has said he could eventually move 4,000 people or more from the UK in the event of an unfavourable post-Brexit relationship with the EU.

But the bank’s employment is less important to London than to Bournemouth, where it employs about 4,000 staff. Dimon visited Bournemouth with then chancellor George Osborne in 2016 to persuade its inhabitants against Brexit. A strong majority in the southern coastal town, which is known for its popularity with retirees, still chose to leave.

Were Brexit now to tip the balance away from Bournemouth’s advantages – in favour, for example, of Poland – labour costs could be the biggest underlying driver of the choice for its back office. Dimon, however, will be well aware that Poland’s political environment is just as dicey and as antagonistic towards the EU as any in Europe.

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