‘Global banks too slow on post-Brexit staff moves’

Bloomberg

Some of the world’s biggest banks haven’t moved enough senior staff into the European Union (EU) after Brexit, the bloc’s top regulator has concluded, an assessment that will likely lead to renewed pressure for more job moves to the EU.
An exercise by the European Central Bank (ECB), known as “desk mapping,” found that several of the lenders reviewed — who all have headquarters outside the EU — haven’t built up sufficient local capabilities to manage their business in the region, people familiar with the process said.
Part of the reason is reluctance among senior executives to move from London to places such as Dublin, Frankfurt and Paris, the people said, asking not to be identified discussing private information.
The conclusions mean the ECB will likely urge the banks to relocate more senior roles into the EU or take other measures that strengthen local management, the people said. The review was designed to assess whether banks are doing enough to manage their risk, rather than a means to push for staff relocations, said the people.
The review included US firms like Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley as well as others Barclays Plc, HSBC Holdings Plc and UBS Group AG, they said.
Almost six years after the UK voted to leave the EU, banks are still sparring with regulators over the structure of their business in the bloc. While many investment banks are reluctant to shift away from London given its deep liquidity and talent pools, the ECB wants to have oversight over the financial risks for the European Union that are embedded in the balance sheets of global banks.
The Bank of England’s Jon Cunliffe warned in March that the ECB may require some business to move back to the European Union following the review. He added that firms may respond by moving to the U.S. instead or elsewhere in the coming years.
Unwillingness among executives to relocate has emerged as one of the biggest obstacles to meeting plans agreed with the ECB to build out EU operations. Many employees have pointed to family reasons and language barriers as reasons to oppose a move to continental Europe.
The ECB kicked off the Desk Mapping Review one year ago to identify where the EU units of some of the world’s biggest banks have key staff and book trades, Bloomberg reported at the time. The exercise required the supervised entities to provide the ECB with a granular overview of their setups, with the supervisor then comparing the results and ultimately turning them into specific findings for each of the participating banks.
The review also found that some banks don’t have sufficient IT and reporting capabilities in the bloc, the people familiar with the matter said. The ECB recently shared findings with the banks and is engaging with them to decide how much remediation is necessary in each case, they said.
The continued unhappiness of the ECB comes despite global lenders having already shifted hundreds of billions of dollars in assets and thousands of jobs to cities such as Paris, Frankfurt, Dublin and Amsterdam — although that’s a fraction of some estimates made shortly after the vote.
JPMorgan alone has turned its Frankfurt-based EU unit into one of Germany’s largest financial institutions by assets and its Paris-based operations into the heart of an emerging trading cluster in the French capital.