As Brexit vote looms, U.S. banks review their European commitments
By Anjuli Davies and Rachel Armstrong
LONDON (Reuters) - If Britain votes to leave the European Union in June, some U.S. banks could give up parts of their business in the bloc altogether.
The option is an extreme scenario under consideration by some Wall Street firms if the terms of an exit, currently a matter of speculation, leave financial services companies in Britain unable under their current set-ups to do business inside the EU, according to discussions Reuters had with several U.S. banks and their lawyers.
The scenarios being studied by taskforces at U.S. banks underscore the extent to which the London operations of non-European banks are linked to business on the continent.
In particular focus are the banks' market operations, as trading of most European securities is regulated at the EU level but conducted by many investment banks mainly out of London.
The five largest U.S. banks employ 40,000 people in London, more than in the rest of Europe combined, taking advantage of the EU "passporting" regime that allows them to offer services across the bloc out of their British hubs.
Having to reorganize business in order to set up new continental European outposts — which U.S. banks say is a worst-case scenario that they are being forced to consider — would be so costly that it would make some rethink their commitment to the bloc altogether.
"The costs may lead some banking groups to reassess how important Europe is in the context of their global business and what sort of presence they wish to maintain post-Brexit," said Edward Chan, a partner at the law firm Linklaters, which has been advising banks on contingency arrangements.