Banks shifting jobs from London post-Brexit need to act fast, German central bank official says

According to a top official at the central bank of Germany, Dublin and Frankfurt are developing as the clear favourites for relocation post-Brexit among banks based in the United Kingdom.

“From the discussions I have, it is my clear impression that Dublin and Frankfurt are the two cities where there is most interest (from City lenders). We have received quite a number of applications,” an executive board member at the German Bundesbank, Andreas Dombret,  informed CNBC on Tuesday.

“We encourage the banks to finalise their thinking, especially the ones that have not done so, and to really think where they want to move and how they want to move … Let’s all not try to walk through the same narrow door in the 11th hour,” continued Dombred.

The financial services industry in Britain is preparing quietly for Brexit given that it’s possible to lose its European Union passporting rights – these are licenses that authorise banks based in the United Kingdom to sell their services over the whole of the European Union.

The discussions between London and Brussels are continuing and it remains unclear how much employees will have to be transferred from London to other European cities. Currently, the disruption seems to be minimal compared to the overall size of the industry.

But there are obvious winners from the exit of some job positions. Dublin and Frankfurt are believed to be the top destinations for companies that want to continue working with clients across the EU.

Slow pace of applications

On Wednesday, regulatory sources told Reuters that less than 10 of roughly 40 banks that conduct European Union business outside London have applied for a license for continuous banking in the bloc after the United Kingdom leave.

According to the news agency, the slow movement of applications is raising worries at EU’s top banking supervisor, the European Central Bank. It also says that some lenders are not doing enough in preparation for Brexit.

‘Not that worried’ over possibility of a systemic banking crisis

When queried whether weak European banks could trigger a systemic crisis across the continent, Dombret stated that this possibility “doesn’t keep me up at night.”

“I’m not that worried about a systemic crisis at all. There are regions, there are sectors and there are certain banks in certain countries which are more exposed than others but it is not a system wide or country wide issue,” continued Dombret.