Bank of America has decided to pick Dublin as its new base for its European Union operations amidst Britain’s Brexit preparations to leave the union. This is the first Wall street lender to pick Dublin, which is a prime location for a smaller location shift while still remaining within an E.U. sphere.
International banks are all planning to set up new subsidiaries in the E.U. to ensure a continuation of their operations to provide client services. These plans come at the behest of the possibility that their operations would stop should London lose its ability to operate across the E.U. when Britain leaves in March 2019. Amongst the possible locations for a new base of operations, both Frankfurt and Dublin have emerged as the current most appealing options for bank’s post-Brexit operations.
Bank of American leans towards Dublin on the basis of its 50 years’ operating in Ireland and engaging in the local community. However, the bank has not reported how many roles would be moved to or created in Dublin, which currently houses over 700 Bank of America staff and a fully licensed entity.
Instead, the bank has been confirmed reporting that some roles would move to other E.U. locations. This ensures Bank of America a wider spread and more flexible influence, while also diversifying its locations portfolio in case any similar issues rise again in the future in other countries of operations.
The Irish government welcomed the news, as it has been a keen to attract investment banks that could boost its economy. This transition also displays Ireland’s attractiveness as a location for investment, as well as the confidence in the government’s approach to securing Brexit-related activities.
While Bank of America is the first to declare Dublin as its new base of operations, it is not the only bank interested in establishing itself in the Irish capital. Barclays has been speaking with regulators regarding an extension of its activities in Dublin, in response to the July 14 deadline requiring details of banks’ Brexit arrangements and relevant details of their contingency plans being submitted to the Bank of England.
Other bankers such as Wall Street’s Citigroup Inc. and Morgan Stanley have both opted to move their base of operations to Frankfurt instead. Morgan Stanley is likely to follow similar intentions as Bank of America by spreading parts of their operations across the E.U., placing its asset management business in Dublin.
Regarding more specifics, Bank of America is extending its existing lease on its building in Dublin, while also beginning talks on two other office spaces in the city. These new office spaces would help Bank of America accommodate up to 1,000 employees, granting the company the ability and flexibility to add an additional 300 staff.
With the mass exodus of banks leaving Britain, it shows that the banks are leaving regardless of whether trade relations between Britain and the E.U. remain following a soft Brexit. These moves are more likely due to logistical reasoning that it is simply safer for business if the banks operate out of E.U. countries. However, these leaves Britain in a tight spot as many of its investment banking operations are abandoning its market, which gives greater importance to its national banks such as the Bank of England, as well as greater risk.
While Brexit will only occur at the earliest in just under two years, moving time excluded the banks are giving themselves a large amount of breathing space to allow themselves to fully settle and establish routine operations wherever they plan to set up. While this helps the banks ensure the continuation of the E.U. operations, new deals and locations will need to be negotiated regarding investment banking in Britain. These negotiations will likely proceed as we get closer to Brexit, when we have a much clearer image of the environment.
Featured Image via Flickr/Mike Mozart