Banks in Britain have tried to reassure their London staff over possible Brexit disruption, including a shift in jobs to continental Europe, as Prime Minister Theresa May triggered formal EU divorce proceedings on Wednesday.
Investment banks Goldman Sachs, JPMorgan Chase and Nomura were among those who sent messages to employees in London, Europe's biggest financial center, as they work out how to keep serving clients across the European Union after Britain leaves the bloc.
Morgan Stanley also informed employees in Europe that no decisions had yet been made on changes for when Britain departs, leaving the EU with 27 member states.
But Rob Rooney, CEO of Morgan Stanley International, was blunter in updating them on the work of a committee comprising senior leaders at the bank which has been making Brexit contingency plans for over a year.
"As prudence would dictate, we have been preparing for a worst case scenario, in which we would need to establish a more significant entity within the EU 27," Rooney said in a memo to staff on Wednesday seen by Reuters.
"We continue to monitor the situation closely and, when appropriate, will take the necessary decisions and begin to execute on our plans."
JPMorgan Chase said in an internal memo that it has spent the last few months reviewing its options. "While our objective in the short term is to limit the number of staff moves, there will inevitably be some staff who will be asked to consider relocation," the bank said.
Richard Gnodde, CEO of the European arm of Goldman Sachs, stressed that no big changes were imminent even though he said last week that the Wall Street bank would begin by moving hundreds of staff as part of its "contingency plans" for Brexit.
"All of this work leads us to conclude that although Brexit may well bring some changes to our footprint, a lot will continue to operate as it does today," he said in a voicemail sent to all London employees' phones last Friday.
May's formal notification of Britain's intention to leave the EU starts two years of negotiations allowed under the bloc's treaty that will shape the future of the country and Europe, as well as London's place as a global financial center.
Gnodde said Goldman Sachs could make long-term decisions only after those negotiations were complete.
"We also understand that you will have many questions regarding the implications of Brexit," he said. "We are sensitive to those concerns, and want you to know that we will share any information on changes that will impact our European footprint as quickly as we can."
May has said Britain will not try to remain in the EU's single market, meaning London-based financial services companies would not be able to sell to clients in the remaining 27 member states in practical terms, unless a special deal were struck.
Fearing they could lose top-performing staff, banks are treading carefully as they contemplate moving London-based workers to continental centers such as Frankfurt, Paris and Luxembourg, or paying them off and hiring employees locally.
Nomura of Japan said in a message to staff on Wednesday that although it had been actively planning for Brexit, no final decision had been made on either location or timing of any new European entity, according to a source familiar with the matter.
Banks are enacting two-stage contingency plans for Brexit. The first involves relatively small numbers of jobs to make sure the requisite licenses, technology and infrastructure are in place, while the next requires longer-term thinking on what their European business will look like in the future. This is when bigger moves might take place.
The British Bankers' Association and the City of London Corporation, which runs the financial district, said in statements it is crucial that after the conclusion of the talks banks retain as much access to the single market as possible.
They both also said that Britain should announce a staggered departure from the EU that would allow British-based banks to prevent market disruption.
Regulatory and banking experts working for the City of London and lobby group TheCityUK are drawing up proposals for a 'mutual recognition' system.
Under this, the EU and Britain would broadly accept firms in each other's financial markets because their home regulatory systems apply similar standards. The aim is for London-based banks to keep serving continental clients, although skeptics say mutual recognition is largely untested globally and would struggle to win approval within the EU.
(Editing by Susan Fenton and David Stamp)