Goldman Sachs is carefully weighing its options vis-a-vis Brexit. Once Brexit negotiations begin there could be more clarity on the terms of the divorce which in turn could allow it to take a meaningful decision.
As per 3 independent sources, who are all familiar with the matter at hand, Goldman Sachs is considering changing its base of operations from London to Frankfurt. The move follows Britain’s historic decision to leave the safe confines of the European Union which allowed companies to access EU’s single bloc market.
If the U.S. investment bank follows through with this move, it would come under the European Central Bank’s jurisdiction. According to a source with the knowledge of the matter, changing its base of operations from London to Frankfurt is key if it wants to service its clients across the entire Eurozone.
“Moving under ECB supervision in Frankfurt is one of the options the bank is considering,” said a source while another revealed that Goldman has already held talks regarding this step with officials from the ECB in Frankfurt.
If the plans, that are currently under deliberation, are given a go-ahead it would signal a change of Goldman Sach’s European presence towards the Eurozone. It would alter London’s status as a centre of global finance and represent a coup for Frankfurt, considered as Germany’s financial capital.
As per a spokesman for Goldman Sachs, there are still “numerous uncertainties” about the outcome of Brexit negotiations. “We continue to work through all possible implications of the Brexit vote. We have not taken any decisions as to what our eventual response will be.”
An ECB spokesman declined to comment.
Once Brexit kicks in, Banks operating in the UK are expected to lose their passporting rights, which allows them to sell their wares across the region.
Currently, the bulk of U.S. banks have concentrated their bulk of European operations from the UK, as per 2014 data from Bruegel, a think tank.
A bank such as Goldman Sachs will qualify for ECB supervision, it it were to increase the assets of its euro zone operations to $33 billion (30 billion euros).
Currently, the bank already has a comprehensive banking license in Germany, however some services are delivered through London, using the passport system through which it sells its wares across the Eurozone. In case of a “hard Brexit” this operation is likely to be affected since it will no more have license to the single EU single market.
If it were to shift its base to Frankfurt, its business in London will still be answerable to UK regulators.