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.
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.
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"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.
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 hub, are beginning to flesh out their plans for their European operations once Britain leaves the EU following two years of negotiations.
The UK government confirmed in January it will quit the single market, meaning banks are set to lose their ability to "passport" into the European Union.
While several banks have plans to move as many staff across Europe as needed to access the single market and comply with local regulations, there has been no sign of a wholesale move out of London, or the city giving up its position as Europe's largest financial center.
Mr. Blankfein said Friday he is confident London will remain Goldman Sachs's biggest hub in Europe.
Earlier this week it emerged J.P. Morgan initially plans to move between 500 and 1,000 jobs out of London. The bank will beef up its operations in Dublin, Luxembourg and Frankfurt, and will re-evaluate its plans and move further jobs if needed once the UK's final trading relationship with the EU becomes clear.
Morgan Stanley is also looking at cities, including Dublin and Paris, The Wall Street Journal has reported.
HSBC has said around 1,000 of its bankers carry out activities which would have to move to Paris in the event of the loss of single market access, while UBS chairman Axel Weber said in January the bank is looking at future options for roughly 1,000 of its jobs.
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(END) Dow Jones Newswires
May 05, 2017 12:00 ET (16:00 GMT)