13 February 2019

Financial Times: Bank of America says no going back on its $400m plans for Brexit move

Anne Finucane, Bank of America’s vice-chair, said her company would spend about $400m — the upper bound of a $300m-$400m range previously given by BofA — on everything from offices to moving people and technology as it tries to ensure clients can trade seamlessly with the EU after the UK’s exit.

“Multiply that by the number of financial institutions that are doing the same thing and it adds up,” Ms Finucane told the Financial Times’ fourth European Financial Forum in Dublin.

BofA’s plans include moving $50bn of banking assets to Dublin and creating a 500-strong trading business in Ireland, which will also have a sizeable but as-yet unspecified asset base. The bank is also moving traders to a new Paris hub.

“Dublin is our headquarters for our European bank now — full stop,” she said. “There isn’t a return. That bridge has been pulled up . . . From a trading perspective, likewise, Paris would be the European trading arm.”

BofA’s estimate for the cost of Brexit is higher than most rivals, suggesting that it has taken more significant action in response to the UK’s vote to leave the EU than peers, some of which already have a more extensive pan-European presence.

Gerry Grimstone, a non-executive director of Barclays, said the UK bank’s Brexit bill would come in at about £200m. Speaking at the same Dublin event, Sir Gerry lamented the lack of progress on Brexit two and a half years on from the vote, saying the UK had spent far too much time and energy on technical questions instead of starting “with a political negotiation in the UK as to what it was aiming for”.

The depths of the political split in Britain mean there is “certainly not a single answer where if it were suddenly unveiled people would say ‘Gosh, we hadn’t thought of that one, how tremendous, how clever you are to come up with that solution,’” he added. “Because of that, it makes the next few weeks very unpredictable.”

In an interview with the FT, Citigroup chief executive Mike Corbat said his bank’s Brexit-related spending was at the “lower end” of the range cited by the Barclays and BofA executives since Citi “went into Brexit operating in 20 out of 27 EU countries” with 60 per cent of its EU staff outside the UK. “Of course we’ve had to supplement that . . . for us the infrastructure isn’t new, it’s just using it differently,” he added.

JPMorgan Chase has spent considerably less than BofA on Brexit thus far because the US lender did not want to make irreversible changes to its European operations before the outcome of Brexit was clear, a person familiar with its strategy said.

However, this week it started sending new contracts to the hundreds of staff that will have to relocate across Europe if there is no deal, the person said. If a deal is struck, the bank can void the contracts and keep the staff in Britain. UBS anticipates spending $100m-$200m on Brexit, according to one person involved in its planning. The Swiss bank already operated a legal entity in Frankfurt — and therefore did not need to set up and structure a new one. [...]

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