Continental Breakfast: your daily update on what’s happening in Europe.
HSBC is preparing to move 1,000 jobs from London to Paris due to uncertainty over the U.K.’s Brexit plans.
Speaking to politicians yesterday, HSBC chairman Douglas Flint said that the bank was making arrangements to shift business away from the U.K. in preparation for a potential loss of European Union passporting rights, which allows financial institutions to run regional trading operations from London.
HSBC is willing to take “preemptive action” to ensure that its business is not disrupted by Brexit and could begin relocating operations to Europe even before the U.K.’s negotiations with the EU come to an end, he added.
The bank works with a number of global law firms, including Allen & Overy, Clifford Chance, Davis Polk & Wardwell, Freshfields Bruckhaus Deringer, Linklaters and Norton Rose Fulbright.
London Stock Exchange CEO Xavier Rolet, who was also at the meeting to advise politicians about the possible impact of Brexit on U.K. business, warned that loss of access to the EU single market could cost Britain tens of thousands of jobs.
Rolet said that London could lose its position as the world leader in euro-denominated clearing unless the government provides clarity on what will happen to financial markets post-Brexit.
The U.K. currently processes three-quarters of all euro derivatives clearing transactions globally, worth around $570 billion each day. An earlier report by big four accounting firm EY stated that a loss of this business could cost London a total of 83,000 jobs over the next seven years, including 18,000 in legal and accounting services.
Rolet and Flint joined widespread calls for a transitional deal that would see the finance industry remain subject to EU laws for several years after Brexit, which formed part of a recently leaked document produced by magic circle law firms Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters on behalf of major banks.
A number of European countries have been positioning themselves in order to capitalize on any post-Brexit fallout from London. France has introduced significant tax breaks for expatriates and simplified the process of registering financial companies; Spain has launched fast-track authorization for financial companies relocating to Madrid, the ability to submit all documentation in English and a commitment not to impose regulatory requirements beyond those set down in EU law; while Germany is considering changing its labor laws in order to help the country win business from Britain.
There are expectations that global law firms may ramp up their investment in Europe as a result.
Deutsche Bank Turns To Social Media To Find Potential Hires
Deutsche Bank has launched a new U.K. recruitment program that will see it monitor social media sites in order to identify potential hires.
A special recruitment team at the bank is analyzing the online activity of university students to find candidates that might not ordinarily apply for a job in finance, the Financial Times reports.
Around 250 potential hires were identified in the first two weeks of the initiative and offered places on the bank’s U.K. graduate recruitment program.
Deutsche, which hires around 750 graduates globally each year, intends to launch similar recruitment programs in the U.S. and Asia.
KWM Europe Stops Staff Salaries As Bank Blocks Payments
The end is surely now imminent for King & Wood Mallesons’ beleaguered European arm, with its entire staff effectively working for free as the firm’s key lender has blocked all salary payments.
Employees at KWM Europe had been told before Christmas that they would receive weekly salaries ahead of the firm’s impending administration, with the first payment due on Friday. But managing partner Tim Bednall sent an email yesterday to inform them that Barclays would no longer authorize the payments.
Bednall said in the email that he made three separate proposals to Barclays that salaries continue to be paid, but that all were rejected by the bank. “I am very sorry that there is nothing further that I can do to cause the bank to change its mind…The bank has put us in an impossible situation,” he said.
Staff will now have to apply to the firm’s administrators in order to claim their lost pay.
Bednall also said in his email that Quantuma had replaced AlixPartners as the firm’s proposed administrator as the latter had “concerns about funding.”
KWM Europe yesterday delayed its administration by filing a second notice of its intent to appoint administrators. The move gave the firm an additional 10 working days to file for administration, which The American Lawyer’s U.K. sister title Legal Week reports is intended to allow KWM’s China arm time to finalize a deal to take on part of the European business.