The chief executive of JPMorgan (JPM) has said Brexit "cannot possible be a positive" for the UK economy in the short-term and warned that the bank may eventually move all of its European operations out of London.
Jamie Dimon wrote in his annual letter to the bank's shareholders: "In the short run (ie, the next few years), this cannot possibly be a positive for the United Kingdom’s GDP – the effect after that will be completely based upon whether the United Kingdom has a comprehensive and well executed strategic plan that is acceptable to Europe."
Dimon said that "uncertainties linger" from Brexit despite Britain officially leaving the European Union, particularly around financial services. The 11th hour Brexit trade deal agreed between the UK and EU in December only covered goods and not services.
The UK and EU have pledged to negotiate a deal on services but senior officials in Europe have signalled they are in no rush. In the meantime, the European Union is pushing banks to move more resources and jobs into the bloc to comply with regulation. The push has sparked alarm at the Bank of England.
Dimon said Europe had the "upper hand" and warned that JPMorgan may be forced to move all its Europe-facing jobs away from the UK. JPMorgan employs 19,000 people in Britain, including 12,000 in London.
"We may reach a tipping point many years out when it may make sense to move all functions that service Europe out of the United Kingdom and into continental Europe," he wrote. Paris, Frankfurt, Dublin and Amsterdam were like to "grow in importance."
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The JPMorgan chief executive warned that there would be "few winners" from this looming "fragmentation" of banking, which would lead to higher costs for customers.
He said London was "a magnificent place to do business" and had the "opportunity to adapt and reinvent itself" but officials have to act quickly.
"Innovation is key to preparing for doing the business of tomorrow versus relying on the shifting ways of the past," he wrote.
As with many bank bosses, Dimon has consistently warned that Brexit would be bad for Britain's financial services sector. In the run up to the 2016 referendum, he warned that JP Morgan could be forced to move 4,000 jobs out of London if Britain voted to leave.
So far the bank has moved hundreds, rather than thousands, of roles to the EU. An estimated 7,600 jobs have moved from the UK to the EU across the industry since the Brexit vote, according to EY. However, experts at the consultancy said jobs and assets were moving "incrementally," suggesting the slow ebb of roles from the City will continue.
While JPMorgan may be forced to move its European-facing roles out of the UK, the bank is still investing in the local market. The American banking giant has announced plans to launch its retail brand, Chase, in the UK and has hired around 400 new staff to spearhead the launch. Chase is expected to launch to the public later this year.
Brexit was one of many topics covered by Dimon in his wide ranging shareholder letter. The long-standing bank boss also talked about inequality, the need for a level playing field between banks and fintechs, the future of the office, and the model for economic recovery post-COVID.