(Bloomberg) — When JPMorgan Chase & Co. asked a team of about 15 London-based equity derivatives traders to move to Paris, it didn’t go down well. Almost half of them chose to quit, several to avoid relocating.
Other global investment banks have faced similar issues. Goldman Sachs Group Inc. and Nomura Holdings Inc. have had a hard time convincing some traders to leave London, people familiar with the matter said, asking not to be identified discussing private matters.
“I’ve got cases of people moving to the Continent and they are really not happy,” said Stephane Rambosson, the London-based co-founder of Vici Advisory, an executive search firm.
Staff who have children in school are particularly reluctant to relocate, the people said. Other concerns include the scope for future career opportunities, pay and the smaller size — at least currently — of other financial centers.
Spokesmen for Goldman Sachs, JPMorgan and Nomura declined to comment.
Whatever the reasons, the resistance among some to leave London poses a conundrum for the industry, coming at a time when banks are facing increasing pressure to move staff into the bloc after Brexit. The European Union is adamant that more assets, people and business must move from the City of London in the coming years. Global banks will need to navigate the competing demands of these regulators as well as their own business needs, without alienating employees they want to relocate.
Regulators including the European Central Bank are pushing lenders to manage risk tied to EU clients inside the bloc. The ECB has kicked off a granular review of each bank’s risk management setup in the EU in an effort to ratchet up the pressure, Bloomberg News has reported.
While London remains — by far — Europe’s largest financial center, banks are increasingly looking to bolster their operations elsewhere. The new head of Morgan Stanley in France told French daily Les Echos in April that he expects the size of its Paris office to double in the next two and a half years to about 300 people.
Deutsche Bank AG recently decided to move about 100 jobs in its corporate banking unit from London to lower-cost locations including Frankfurt and Dublin. While staff can choose to move along with their job they must accept a pay cut.
Frankfurt is proving a particularly hard sell, half-a-dozen bankers and executives interviewed by Bloomberg say, even though several banks including Goldman, JPMorgan and Nomura have set up their EU hubs in the German financial capital. Some Nomura traders have expressed a preference to move to Milan or Paris, although Covid-related restrictions on travel by Eurostar, which offers a quick and hassle-free transport link between the French and U.K. capitals, has reduced the appeal, the people said.
The unwillingness of some traders to up roots and move out of London contrasts with the ease with which assets have been shifted around since Brexit. JPMorgan moved $200 billion euros in assets to Frankfurt last year and a similar amount is to follow in 2021. Equity trading too now has gone from London venues to EU ones.
Those shifts haven’t required equally substantial on-the-ground changes or personnel moves yet. As more assets and evenutally people move, some expect the misgivings about relocations will fade.
“It will change,” recruiter Rambosson said, noting the attractiveness of tax breaks offered by countries like France and Italy and the increasing number of leadership roles being located in Europe. “It’s definitely possible these days to not be based in London and for it not to be career limiting.”
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