Royal Bank of Scotland Group Plc Chairman Howard Davies said details of a post-Brexit transitional deal with the European Union need to be outlined in the next five months to stop more financial-services jobs from leaving London.
“If there are no details by the first quarter of next year, the number of moves of people out of London will accelerate,” Davies said on Sky News Sunday. If nothing is certain by then, “I think people will trigger those contingency plans” requested by the Bank of England for the U.K. exit from the EU.
A “relatively small” number of RBS’s employees will leave Britain’s capital and financial hub after the U.K. quits the EU in March 2019, Davies said, with a “re-balancing” of financial activity in Europe. The bank is setting up a subsidiary in Amsterdam, to which 150 jobs will be moved.
The U.K.’s financial services sector may be among the hardest hit by Brexit, as London is a key financial hub, undertaking activities such as euro-denominated clearing. London could lose around 10,000 banking jobs and 20,000 positions in financial services as 1.8 trillion euros ($2.1 trillion) of assets are moved out of Britain after Brexit, according to a report from the Bruegel think tank, based in Brussels.
Prime Minister Theresa May last month proposed a time-limited implementation — or transition — phase of about two years to maintain trade ties to the U.K.’s biggest market and give businesses additional time to adjust to the new regime.
Businesses are concerned that May’s government is taking a long time to get to the “nitty-gritty” of what a new trading relationship with the EU would look like, Davies said. Last week, Chancellor of the Exchequer Philip Hammond described a transition period as a “wasting asset,” suggesting that the longer it takes to nail down, the less it’s worth to the U.K.
“Certainly some time I think has been wasted up until now in negotiations, which haven’t really got anywhere,” Davies said. When asked whether the government recognizes that banks are already beginning to suffer, he said: “I hope so, because we keep telling them.”