France’s market regulator has said that leading banks in London are in the advanced states of moving their operations to Paris, amid Brexit fears, reports. Benoit de Juvigny, secretary general of Autorite des Marches Financiers (AMF), said to the BBC, that ‘large international banks’ in London have taken steps to move procedures to the French capital.
In the event of a ‘hard Brexit’ British financial institutions would lose their passporting rights, which currently permits banks in the U.K. to provide services across the European Union without any restrictions. When Britain leaves the EU, however, there is no guarantee that a similar agreement will be put into place. Accordingly, there are at least eight financial centres across Europe that are actively seeking to attract businesses that are based in London. These include Paris, Frankfurt, Dublin, Luxembourg, Amsterdam, Madrid, Bratislava, and the Maltese capital, Valletta.
However, de Juvigny warned there could be an impact with regulators trying to compete with one another.
According to de Juvigny:
The danger is the race that we could have for a more lenient regulation with a more lenient regulator. He added that the risk of such leniency was lax regulation, which could ultimately lead to another financial crisis.
London Still the Global Hub, For Now
Only recently a new report from Deloitte and All Street Research found that out of the 21 major FinTech hubs, London ranked at number one. It was followed by Singapore, New York, Silicon Valley, and Hong Kong. Since the results came in earlier this year that Britain had decided to leave the EU many have been questioning whether London would remain the global hub. For now, it is, but who’s to say what will happen after Article 50 is triggered next March.
The fact that many banks have already started the process of moving their operations to another European country may suggest they feel as though London is no longer the best place to be located. As such this news will increase pressure on the city to demonstrate that regardless of the Brexit vote, London remains the best place for companies to do business.
It remains now to be seen what impact this will ultimately have on the city and financial institutions as the triggering of Article 50 looms closer with questions remaining as to how the city of London can retain its top spot especially when Britain will be standing alone literarily compared to the larger market the European Union will keep.
What will this movement mean for even the African continent?