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For Top Banking Talent After Brexit, London Loses Some Allure

Posted by hkarner - 13. August 2016

Date: 12-08-2016
Source: The Wall Street Journal

Decision to leave EU creates many uncertainties

LONDON—Thomas Ozello, a student at France’s elite École Polytechnique, planned to follow the well-trodden path from applied mathematics to a London trading desk.

Then Brexit happened, and the 22-year-old Mr. Ozello set his sights on a new destination: Asia.

After the U.K. voted to quit the European Union, London’s position as a global financial talent magnet is in the spotlight. Top mathematicians and economists were traditionally lured from universities across Europe to earn big in the British capital. The City, with more relaxed labor laws than much of Europe and a large cluster of financial companies, was a natural springboard for future financiers.

Now the move isn’t such a no-brainer. “We don’t know whether it will be as good in terms of remuneration or jobs,” said Mr. Ozello, who has one more year of study left in France. “Brexit has created a lot of uncertainties.” So Mr. Ozello is considering a career move to Singapore.

Brexit opens up a realm of unknowns, including whether current European workers will be granted visas to stay in the U.K. or if banks will have to move operations out of Britain to serve customers in the eurozone. The complex negotiations could last years.

Around 10% of the 360,000 workers in the City of London are non-British EU citizens, according to a census in 2011.

Foreigners City of LondonBanks are already fretting about the effects. On July 29, Barclays PLC warned in an earnings release that Brexit could hinder its ability to tap the EU’s “talent pool.” Human-resources departments at several lenders are trying to reassure unsettled staff that they won’t be asked to move, at least for now. TheCityUK, a finance lobby group, recently published a blueprint on how the country should organize itself post-Brexit, saying that free movement of talent across the EU “is essential to the UK remaining a leading financial centre.”

The next generation is looking on perplexed. Maximilian Von Kempis, who graduated from the Frankfurt School of Finance and Management, was, along with a friend, waiting to see how the Brexit vote went before applying for London-based jobs in mergers and acquisitions. He woke up at 6:15 on the morning after the vote and had to check his phone twice when he saw the result. “I couldn’t really believe it,” he said. Now the 28-year-old is holding off, waiting to see how the negotiations with the EU go. He may move to the U.K. for a couple of years but probably not more.

Others are more sanguine. “Today is not so different from yesterday,” said Michele Cafagna, a 26-year-old Italian who has just finished Bocconi University’s master’s program in quantitative finance and risk management. Negotiations to quit the EU could take at least two years, when they are officially triggered. Until then, the U.K. will remain in the EU. “If I worked in London, then got told to go to Frankfurt, it is not a big deal,” he added.

So far, no major banks have begun shifting staff out of the U.K. since the Brexit vote. J.P Morgan Chase & Co. warned before the referendum vote that as many as 4,000 jobs could go if Brexit happened. HSBC Holdings PLC estimated around 1,000 investment-banking positions could move to Paris.

A more immediate threat is that investment banks chop London-based roles amid tepid returns, analysts say. A large chunk of these are likely to be back-office jobs, which can be moved to cheaper offshore locations.

London still has many draws. It remains an exciting and multicultural place to live and, compared with countries like France or Italy, has more-flexible employment laws, making it easier for young workers to get a job.

If you are going to work at an investment bank in Europe, you might as well head to London, said Philip Schnorpfeil, who is completing a doctorate in empirical capital-markets research at German business school WHU–Otto Beisheim School of Management. “It’s more enriching than Frankfurt for example,” he said.

The 24-year-old student in game theory spent a recent weekend discussing Brexit with a visiting friend. He is thinking about an internship with an investment bank in London. “It depends if there is a change in the supply of attractive jobs in London,” he said.

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