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Speaking on condition of anonymity, three senior officials in Prime Minister Theresa May’s team raised concern that an agreement on access for London-based banks to the European market could be impossible.
One minister said discussions about a new regulatory framework for U.K.-based banks should be put aside to avoid holding up conversations about other sectors, such as manufacturing and agriculture. Another official said the idea of leaving a deal on banks until later was already being discussed in London and Brussels, where most of the negotiations will unfold.
Any weakening of the prospects for a trade deal involving finance would reinforce the need for global banks to plan for the worst and activate plans to move jobs and operations from London to other EU cities. Not doing so would jeopardize their ability to business in the EU after Brexit in March 2019.
JPMorgan Chase & Co. is already in talks to buy office space in Dublin, while Citigroup Inc. may move some workers to a new trading unit within the EU.
In opening two years of Brexit negotiations on Wednesday, the prime minister this week drew praise from financial services by calling for a “bold and ambitious” trade deal encompassing the sector. She said the talks “should prioritize the biggest challenges” during technical discussions. [...]