Russian bank first to opt for post-Brexit move

VTB, the Russian bank, will be the first to move its European headquarters out of London following the EU referendum vote in June.

VTB first to move Euro HQ out of London
VTB, Russia's second biggest bank, has become the first major financial institution to state it will move its European headquarters out of London in the wake of the referendum vote to leave the European Union.A report in the Financial Times on Tuesday said the bank, which is 61 per cent owned by the Russian government and employs about 500 people in London, is looking to relocate its HQ to Frankfurt, Paris or Vienna."We did have bigger plans for the London office, but after Brexit we are scaling them down and building them up elsewhere," Herbert Moos, VTB's chief financial officer told the FT. "Our board will decide where by the end of the year. "We are looking at several factors to decide where we switch our European headquarters to, including regulation, fiscal policy and the talent pool. Frankfurt, Paris and Vienna are all being considered."Other international banks with London headquarters – most recently, Goldman Sachs, which talked of relocating 2,000 staff – have been threatening to pull out of the City if, as a result of Brexit negotiations, the UK loses the passporting rights that enable banks to conduct business unfettered throughout Europe.Not coincidentally, perhaps, Simon Kirby, the financial services minister, went on the record hours after the VTB story was published to state that getting the best deal for the City would be an "absolute priority" in the UK's exit negotiations with the EU. 

More about Brexit's impact on the UK:


Urging the financial services sector to enter a "constructive collaboration" with the government, Mr Kirby said ministers would listen sympathetically to the banks' requirements, including their ability to continue to bring in talent from across the globe – something that appeared to run counter to the anti-immigration sentiment expressed at the Conservative Party conference the previous week. "Can the UK still be one of the best financial centres anywhere in the world, even if we're outside the EU? Well, let me say this is an absolute priority for this government," Mr Kirby said.News of the VTB pullout added to concerns over the UK's current account deficit and resulted in a fourth day of falls in the value of sterling.Additionally, leaked government papers seen by The Times warned on Tuesday that the Treasury could lose up to £66 billion a year should there be a 'hard Brexit' from the EU, resulting in the UK losing access to the single market and being forced to switch to World Trade Organization (WTO) rules."The Treasury estimates that UK GDP would be between 5.4 and 9.5 per cent of GDP lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5 per cent," says the briefing document."The net impact on public sector receipts – assuming no contributions to the EU and current receipts from the EU are replicated in full – would be a loss of between £38 billion and £66 billion per year after 15 years, driven by the smaller size of the economy."Tim Farron, Liberal Democrat leader, said, "This is yet more proof that a hard Brexit would be an act of sheer economic vandalism. The Liberal Democrats will stand up for Britain's membership of the single market."A government spokesman said, "We want the best outcome for Britain. That means pursuing a bespoke arrangement that gives British companies the maximum freedom to trade with and operate in the single market, and enables us to decide for ourselves how we control immigration."

For related news and features, visit our Brexit section.

Access hundreds of global services and suppliers in our Online Directory

 

now to our Global Mobility Toolkit

Related Articles