US bank JPMorgan Chase (JPM) is moving around €200bn (£183bn, $230bn) in assets from the UK to Frankfurt, Germany’s financial hub, before the UK finally leaves the European Union.
Bloomberg, which first reported the news, said sources confirmed that the asset migration will happen before the end of this year — when UK-headquartered banks will no longer be covered by passporting agreements that allow them to do business in the EU.
The assets earmarked to be moved to the Frankfurt hub reportedly equal just under 10% of JPMorgan’s total balance sheet, according to Bloomberg. JPMorgan declined to comment.
Frankfurt, Dublin and Paris are among the European cities that have been vying to attract banks looking to move assets, or entire hubs out of London into the EU. Barclays moved its European headquarters to Dublin last year along with some €200bn in assets, while HSBC is moving around 1,000 jobs to Paris. Bank of America (BAC) will set up its European brokerage arm in Paris, and its EU banking headquarters in Dublin.
Some major banks, including Barclays (BARC.L) and Lloyds (LLOY.L), have begun sending letters to their UK account holders who live in the EU informing them they will no longer be able to service them after 31 December, when the Withdrawal Agreement ends, because of the cost and the complexity of EU banking rules.
If there is no new financial services agreement before 31 December, then banks would be forced to apply for new banking licences with individual EU countries.
Jason Porter, director of specialist expat advisory firm Blevins Franks notes that passporting is currently possible because the UK Financial Conduct Authority is bound by the same rules and standards as other regulators in the EU.
“But once the UK leaves the EU, the regulation of financial activity and consumer protection may not continue to line up on both sides,” Porter said. “As such, unless a mutual deal is agreed on financial services, the EU will not permit ongoing passporting arrangements for UK financial businesses and advisers from 1 January 2021.”