In his annual letter to shareholders, Jamie Dimon highlighted that, while a trade deal was done before the New Year, many issues still needed to be negotiated, and that “Europe has had, and will continue to have, the upper hand.”
JPMorgan has around 12,000 staff in London and 19,000 in the UK.
Dimon said it was possible that a “tipping point” may come where it has to move all its London operations serving the EU to the continent.
He was writing as many in the City have been concerned at the lack of a comprehensive arrangement for how financial services - Britain’s biggest industry - will be conducted between the UK and the EU.
While the two sides recently signed a memorandum of understanding on financial services, they are a long way from agreeing an equivalence deal that would grant further access to UK-based firms.
Speaking of the power imbalance between the UK and EU on these talks, Dimon said: “In the short run (i.e., 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 how effective the old system had been for international banks like JPMorgan, with London being the financial centre from which they could conduct business seamlessly throughout Europe.
“It was hugely efficient for all of Europe – and for financial services companies as well,” he said.
He praised London as being “a magnificent place to do business” in terms of the rule of law, people and technology but said future financial rules with the EU remain uncertain in Brexit.
“It is clear that, over time, European politicians and regulators will make many understandable demands to move functions into European jurisdictions.
“Because of this – and because of strong European efforts to compete with London – Paris, Frankfurt, Dublin and Amsterdam will grow in importance as more financial functions are performed there.”
However, he wrote, there would be few winners from this “fragmentation” because costs - probably passed on to customers - would rise as work gets duplicated.
He warned: “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.”
However, he said London could still reinvent itself with digital finance and other technological advances in financial services.