18 December 2017

Financial Times: London fund managers warn of a ‘sneaky’ Brexit

The £8tn UK asset management industry is more vulnerable to Brexit than it seems, fund managers have warned, as they abandon or delay investment and talent bleeds to rival financial hubs.

[...]Senior industry executives are becoming increasingly vocal about what they describe as a “sneaky Brexit” as fund managers move to other cities such as Paris or Frankfurt.

“The talent is quite mobile in our industry. There has been a drain back to Europe and the UK is suffering from that,” said Andrew Formica, co-chief executive of London-based Janus Henderson, who said the industry would be hit by waning investment.

“Because of the uncertainties people are delaying making these [investment] decisions. Why would you commit to a five-year investment cycle? The answer is you don’t.” He added that once companies decided to shift investment elsewhere “that’s irreversible”.

Peter Branner, chief executive of Sweden’s SEB Investment, which manages €100bn, said: “The clarity on Brexit is still not there. Companies are starting to move operations in advance of that clarity — in other words a sneaky Brexit.”

He added: “And you will also see the labour force suffering as fewer skilled foreign workers come to the UK.”

Fund managers are thought to be less exposed to the threat of Brexit than other parts of the City because ESMA, the European financial regulator, has said that the current arrangements that allow them to use London as their main hub to sell products and services across the EU should not be interrupted. Firms are allowed to delegate portfolio management to other countries so that investors can benefit from the best advice for the asset type or investment strategy.

Any disruption to this would also affect asset managers from North America and Asia, as well as the activities of domestic UK companies. [...]

Full article on Financial Times (subscription required)

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