Switzerland’s largest bank, UBS, has chosen German financial hub Frankfurt as its new EU headquarters as it puts in place contingency plans for the possibility of a no deal Brexit, its CEO said on Monday.
Speaking to Bloomberg TV, UBS boss Sergio Ermotti said that the bank’s preparations for a disorderly Brexit have led it to choose Frankfurt as the base for future EU operations once Britain has left the EU.
Ermotti told Bloomberg that while Frankfurt will be UBS’ main hub, it will carry out what he described as a “multi-location strategy,” doing business from offices in Paris, Milan, and Madrid.
“The financial system is already operating on the assumption that there is no agreement,” he said, referring to a no deal Brexit in which the UK falls out of the EU without any concrete arrangements.
“Whatever is going to happen from now onwards, it’s not going to make the exercise less expensive,” he added. UBS has previously said that it expects Brexit contingency planning to cost around $100 million.
Major financial organisations are being forced to rethink their European strategies as a result of Brexit and the coming end to financial passporting arrangements.
Passporting rules allow finance companies to sell their services across the 28-member bloc with just one local license, rather than getting a license to operate in each member country where it does business. It is tightly tied to membership of the EU single market and will be lost once the UK falls out of the EU.
Ermotti did not give an indication of the number of staff UBS expects to shift out of the UK, although in recent weeks several senior bankers have said that the number of people being moved out of London post-Brexit will be much smaller than initially expected.
Last week, executives from Citi and Barclays Ireland told UK MPs serving on Parliament’s Treasury Select Committee that each bank currently expects to move only around 150 roles out of Britain due to Brexit. An executive from JPMorgan said the bank expects to move hundreds of roles.
In the early stages of Brexit planning, numerous lenders warned that thousands of jobs could be relocated, but it now appears that such predictions were overzealous.
Ermotti also said that while there is likely to be a significant economic impact from Brexit, suggestions it could cause a major downturn are likely incorrect.
“I don’t believe Brexit can be a trigger for a financial crisis or a banking crisis. But it could undermine investments, and trigger maybe a slowdown in the economy,” he said.