London's expansion as a financial center could "stall" and banks may need to consider moving staff out of the city because of Brexit, the chief executive of Goldman Sachs Group Inc. has warned.
Continue Reading Below
Lloyd Blankfein said the city is at risk of backtracking, but that the bank hopes to be able to continue to conduct its business as close as possible to the way it does now once the U.K. formally leaves the European Union.
"I don't think it will totally reverse," Mr. Blankfein said in an interview with the British Broadcasting Corp. published Friday. "It will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain and I know there isn't certainty at the moment."
"If you cannot benefit from the access to the EU from the U.K... the risk is there will be some adjustment that will cause some people to have a smaller footprint in the U.K." he said.
The U.S. bank, which employs around 6,000 people in London, has a range of contingency plans in place to move staff out of the U.K. and into other European cities including Paris, Dublin and Frankfurt if needed in the wake of Brexit. These include taking options on office space and studying the regulatory regimes in other European countries, Mr. Blankfein said. In terms of moving staff, he said the bank doesn't have "big plans now."
Mr. Blankfein didn't say how many staff could eventually move out of London, although the bank has previous indicated it would initially move hundreds of jobs to the EU.
Continue Reading Below
However, the culture, language and "special relationship" between the U.K. and U.S. leaves Goldman eager to "try to stay as close to home as possible," he said.
Mr. Blankfein called for a clear signal from the U.K. and EU on how a possible transitional period following Britain's exit from the bloc could work. Without this, he said, the bank may have to act on its plans to move staff "prematurely."
Banks and lobby groups have called for a transition period to help them prepare properly for new rules that will come into force following Brexit.
Major international banks, which have for years used London as a regional base, are beginning to flesh out their plans for their European operations once Britain's leaves the EU and its single market for services.
Mr. Blankfein's comments come the same week that it emerged that J.P. Morgan Chase & Co. plans to move between 500 and 1,000 jobs out of London as it implements its Brexit contingency plan. Morgan Stanley is also looking at cities including Dublin and Paris, The Wall Street Journal has reported, while HSBC Holdings PLC has previously indicated it may move around 1,000 staff to Paris.
Write to Philip Georgiadis at firstname.lastname@example.org
(END) Dow Jones Newswires
May 05, 2017 09:43 ET (13:43 GMT)