Lobby group Frankfurt Main Finance (FMF) released the figure last week—which was calculated based on a confirmation that 30 financial institutions had applied to the European Central Bank to move their headquarters to Frankfurt. It claimed that this number would be higher by March and continue to increase beyond Brexit.
The $900bn is being moved out of London relates to balance sheet assets such as cash, inventory and prepaid expenses. FMF told CNBC via email that companies were moving those assets from London to Frankfurt so that new offices could meet minimum operational and regulatory requirements.
In the report, FMF Managing Director Hubertus Vath also stated that uncertainty was forcing banks to relocate selected business divisions or their businesses out of the UK. He stated: “As long as uncertainty persists, most institutions are likely to prefer the minimum solution. In any case, it is clear that considerable second-round effects will follow.”
Several large banks have stated that they will shift jobs out of London before Brexit kicks in. FMF stated that it believed up to 10,000 jobs would be move to Frankfurt ahead of Brexit, and job relocations to the city will continue until 2024.
It is however a bit more complicated in many cases as some banks have opened or expanded existing European offices, but not have announced massive plans to shift staff from London to those locations. Other banks are also looking into larger-scale overhauls of European operations.
Groups representing London and its financial sector told CNBC that the industry was preparing for the worst-case scenario but was yet to feel a major impact of corporate relocations. Catherine McGuinness, a policy chair at the City of London Corporation, said she had not seen fears of substantial job losses materializing.
“Firms are, however, watching closely to see how negotiations between the two sides progress. This will play an important role in determining whether we see more jobs move to the continent after Brexit,” she stated to CNBC in an email.
“London’s global financial hub cannot, though, easily be replicated anywhere else on the continent. It is now in everyone’s interest to move towards a future agreement which covers financial and professional services — to fail to do so would undoubtedly damage both the EU and U.K. economies, limiting growth and risking jobs.”
Stephen Jones, the CEO of trade body UK Finance, told CNBC via email that the country’s economic future depended on politicians showing pragmatism over ideology and “having an honest debate about the true cost of leaving the EU without a deal in place.”
“The finance industry will continue planning to minimize any disruption from a ‘no deal’ scenario until the agreement has been ratified on both sides of the Channel. During this time it is vital that both the EU and U.K. continue to work together to address potentially critical cliff-edge issues such as cross-border data flows and contractual continuity, to provide customers and firms with sufficient legal and regulatory certainty,” he added.