Deutsche Bank is considering cutting its UK operations should the country pull out of the European Union and an industry lobby group said several other banks are mothballing investments until the outcome of Britain’s EU referendum is known.
Prime Minister David Cameron has promised to renegotiate Britain’s relationship with the EU and then hold a vote by the end of 2017 on whether to stay in the bloc or leave.
Deutsche (DBKGn.DE), the euro zone’s second-largest bank by assets, has almost 9,000 staff in Britain. It has formed a working group to consider moving some operations to Germany or elsewhere in the euro zone in case of a “Brexit”, a spokeswoman for the bank said.
It is not the only one to rethink operations, according to the British Bankers’ Association, with many banks also hurting from a UK bank levy that applies a tax on assets of their UK businesses and which was increased for an eighth time in March.
“Some banks have recently moved operations and jobs out of the UK due to punitive hikes in bank taxes. Other banks have deferred decisions about whether to invest in Britain until after the referendum,” said BBA Chief Executive Anthony Browne.
Industry sources said yet more banks from Europe, the United States and Asia are stepping up their contingency planning, which could include moving more of their trading operations, such as repo desks, to Dublin or elsewhere.
The BBA has commissioned former financial regulator Sir Hector Sants to review Britain’s competitiveness on behalf of the industry and report recommendations to the government in the autumn.
Many international banks use the UK to gain access to the single market and as a base from which to sell financial products and services across the region. The threat of Britain leaving the EU could prompt them to rethink that structure.