The feared mass exodus of City bankers may never have materialised after Brexit, but senior dealmakers say there has still been a shift in power benefiting other European cities.
Top investment banks are no longer tapping London-based staff on the shoulder for a move to the EU. Instead, they are looking to bolster their dealmaking units in the bloc, building teams of juniors around key senior hires.
“The after-effect of Brexit is that we hire more organically in the EU,” said Jens Welter, co-head of banking, capital markets and advisory for Emea at Citigroup.
“A lot of our bankers developed in countries on the continent and may have moved to the UK for bigger roles. But they are now less likely to move to London,” he added.
“It becomes a natural evolution of the business as we base more senior bankers in key locations in Europe.”
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A sweeping report published by consultants Oliver Wyman in the immediate aftermath of the Brexit vote in 2016 predicted 34,000-40,000 UK financial services jobs could be lost in London to the EU. However, EY’s latest Brexit tracker puts the number of staff relocations at just 7,000.
The ‘Brexodus’ may not have happened, but European cities have nonetheless become home to more bankers and the offices there are still growing.
“We have three offices to house our staff post-Brexit in Dublin, Paris and Frankfurt,” said John Langley, head of international at Wells Fargo.
“But rather than moving people from London we have been hiring people in these locations. We have around 300 staff in Dublin now and so we are in a good position to leverage those locations.”
Paris has so far beaten other EU hubs battling for greater status in the wake of Brexit, including Frankfurt, Dublin and Luxembourg, to become the key centre for large international banks.
The European Central Bank’s desk-mapping review is piling more pressure on banks to shift assets and people out to the EU. But recent hiring sprees numbering hundreds of staff have largely focused on the markets business, which has landed in the French capital.
JPMorgan more than doubled its employee numbers in EU locations to 4,100 last year, as local hiring and Brexit relocations picked up pace. Goldman Sachs has 1,110 staff across its EU hubs, which is an increase of around 540 people within two years. Headcount at Morgan Stanley’s European operations also jumped 22% to 645 people last year.
Bank of America, Citigroup and Morgan Stanley are adding hundreds of traders to their Paris offices, too.
“We have prepared carefully for Brexit and related people moves, and have done so by building on our broad and pre-existing regional presence across Emea,” said Dorothee Blessing, co-head of investment banking in Emea at JPMorgan.
Regulators have not forced many dealmakers to shift to new locations in the EU. However, investment banks have used Brexit as a reason to disperse their teams across key European cities, where they can often be closer to clients.
“It is not just a case of a banker in London leaving and then a bank deciding to shift their seat to the EU,” said Andreas Halin, the founder of Frankfurt-based banking headhunter Global Mind. “It is tougher than that — they fill a seat on the continent, then they look back to London and ask: ‘Why do we need this guy?’”
“London was always the power centre, but that balance has changed,” he said. “Banks have moved from hiring for operational functions after Brexit to hiring revenue-generators. We now see recruitment across all levels in investment banking including graduates. It is getting bigger and bigger.”
Brexit as a ‘catalyst’ to disperse dealmakers
Bank of America has doubled the size of its investment banking team in Paris since 2021, according to a person familiar with the matter.
Meanwhile, Anthony Gutman, co-head of Emea investment banking at Goldman Sachs, previously told Financial News the bank had used Brexit as a “catalyst” for its plans to disperse dealmakers across the bloc.
The latest figures from the European Banking Authority show a 42% surge in the number of bankers earning more than €1m in the EU. There were 1,957 high-earning bankers in the bloc at the end of 2021, according to numbers published in January. That was the highest since the EBA started tracking those earning more than €1m in 2010.
Germany now houses the most high-earning bankers of all member states with 589, followed by France with 371 and Italy with 351.
Goldman now has its Emea technology, media and telecoms head Macario Prieto and co-head of industrials Axel Hoefer based in Frankfurt. Francesco Pascuzzi co-heads its natural resources team globally from Milan, and a team of six financial institutions-focused dealmakers moved from London to Paris. All have juniors supporting them.
“We are now at a phase less of moving people from London to these places, but hiring people in the locations,” Gutman told FN. “There are plenty of roles that historically would have been a London seat, but we are now hiring in those countries instead.
“It is also not going to work if we just put senior bankers there. We are trying to shift the dial from the vast majority of our intern and graduate group being based in London to a more representative sample based in Europe consistent with our business mix. That is the phase of the journey we are in now.”
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Investment banks have been stripping out thousands of dealmakers this year as fees have slipped by 26% on an already muted 2022. Firms including Citigroup, Goldman Sachs and JPMorgan have all squeezed their European operations.
But many of these cuts have hit the UK harder, as stricter labour laws in some parts of the EU make redundancies more difficult to implement.
“You might see a bank strip out 5-10% of their workforce globally, but in Europe that has largely been in the UK,” said Halin.
“Meanwhile, EU hubs have continued to grow steadily. There’s a rebalance.”
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