Amid growing concerns regarding UK's exit from the European
Union ('EU'), several U.S. banks are contemplating to shift their
London-based operations to Ireland. The news, first published by
, referred to large Wall Street firms like Citigroup Inc. (
), Bank of America Corp. (
) and Morgan Stanley (
) that are eying Ireland as a destination if it becomes necessary
to leave U.K.
Though the plans are in the preliminary stage, the latest
revelation reflects that U.S. banks are getting ready for the
likely isolation of Britain, which joined the club in 1973, from
the EU due to the impending new banking union in the continent.
This will eventually lead to the UK's exit from the EU.
U.K. Prime Minister David Cameron has pledged to hold a referendum
on a renegotiated EU membership, provided his Conservative party
wins the May 2015 election.
Several US and Asian banks have their base in the UK that
accommodates over 250 foreign banks for European operations as the
country provides them an automatic passport to conduct business
throughout all the 28 countries in the EU.
Brexit - the term coined to refer to Britain's exit from the
Eurozone - will probably lead to the termination of the passporting
rights to UK. Consequently, such rights will not be available for
However, Ireland has several positives that are luring U.S banks to
shift their operations from UK in the event the latter leaves the
Eurozone. These include low corporate tax rate, Eurozone
membership, English language, and a English based legal system.
Dublin - the capital and one of the largest cities in Ireland seems
to be the hot spot.
Citigroup, BofA and JPMorgan Chase & Co. (
) have Irish banking licenses that would permit them a passport,
giving access into other EU countries. Currently, Citigroup has an
employee base of 2,500 people in Ireland while both BofA and
JPMorgan have over 500 employees in the country. Morgan Stanley
does not posses Irish banking license but has a hedge fund
administration business in Dublin.
Other possible locations considered by the U.S.-based banks include
Frankfurt and Paris.
Last month, through a Treasury submission, foreign banks in London
were cautioned about the potential implications of UK's exit. The
Association of Foreign Banks, whose members include BofA, Société
Générale and Sumitomo Mitsui Trust Bank, expressed their view
against the exit, given Britain's importance in influencing EU
rules and business volume. However, if Britain departs from the EU,
they will reconsider continuing operations in Britain and may shift
to some other region.
While nothing can be inferred conclusively, considering the
attraction of Ireland, U.S banks may benefit following the shift of
their operations from the UK.
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