Career-minded investment bankers in Europe could see the writing on the wall way back in 2016 when the U.K. voted to leave the European Union. Their industry, and their careers, were heading for change even if the City of London managed to hang on to its dominance as a post-Brexit financial center. But what many were unlikely to have foreseen is how big the shakeup of the status quo would be, with U.S. investment banks further increasing their influence over talent pools as a once-cozy community scatters across myriad cities.
Analysts and market players are predicting that Brexit will likely trigger a war for talent across financial centers in continental Europe, pitting home-grown EMEA investment banks against heftier U.S. competitors.
In aggregate, more than 7,500 financial services jobs and £1.2 trillion worth of assets are set to leave the U.K. by the end of the Brexit transition period Dec. 31, EY consultants said in an October report.
That leaves other European financial centers braced for change.
Frankfurt, for example, may become a larger base for Citigroup Inc., according to analysts at equities research house Kalkine, while JPMorgan Chase & Co. recently decided to move assets worth nearly $230 billion from the U.K. to its division in the German city by the end of 2020. The planned asset transfer will make JPMorgan the sixth-largest lender in Germany, The Times of London estimated in a Sept. 24 report.
JPMorgan is also planning to purchase a building in central Paris, where it has 260 employees, to accommodate 450 additional staff, the Kalkine analysts added in an emailed statement. They also cited Bank of America Corp., which is planning to shift 400 jobs to Paris and other European cities this year.
The talent war has already started, Hubertus Väth, managing director of Frankfurt Main Finance eV, a membership organization promoting the German city as a financial center, said in an interview. He said that in recent conversations with contacts at financial institutions in Frankfurt, “all of them tell me stories about where key talent has been poached [and] they had lost key people to competitors.”
“[W]e suddenly need trading capacity, compliance people, finance people, M&A bankers,” Kristine Braden, head of Citigroup‘s post-Brexit hub, told a conference hosted by Handelsblatt in September.
“It’s amazing how much competition there is right now in the talent pool,” the Frankfurt-based executive added.
Stoking that competition are the big U.S. banks — Goldman Sachs Group Inc., JPMorgan, Morgan Stanley, Bank of America and Citigroup — which have higher earning capacity enabling them to offer more generous pay and greater access to work-enhancing technology than many local institutions, James Ridd, Americas CEO of London-based recruitment firm Hanover Search Group, said in an interview.