City firms may lose "prized" EU access, says French Bank chief

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London’s financial institutions risk losing their prized access to the EU if the UK leaves the single market, said the head of France’s central bank.

Francois Villeroy de Galhau said London’s banks would lose their “financial passport”, which allows them to trade freely in the EU.

Earlier, the head of the Eurogroup of finance ministers Jeroen Dijsselbloem said banks would move outside the UK.

But UK economist Gerard Lyons said it would be difficult to displace London.

Many London-based banks currently serve customers throughout the EU unhindered under rules known as “passporting”.

However, that would be under threat if the UK chooses to leave the single market as part of its withdrawal from the EU.

Leave campaigners said London would remain Europe’s financial centre, and that “passporting” would be part of the negotiations on the UK’s trading relationship with the EU.

‘Paradox’

Mr Villeroy de Galhau, who is also a member of the European Central Bank’s governing body, said talks should start quickly.

“There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules,” he said.

“It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market.”

‘Price’

US bank Morgan Stanley said on Friday it would “adapt accordingly” to a UK exit from the EU, after reports it could move up to 2,000 of its London-based staff to Dublin or Frankfurt.

Mr Dijsselbloem, the Dutch finance minister, said: “A few years ago, London took out adverts in the Asian edition of the Financial Times saying it was the place to come if you wanted to do business in the EU.

“Now they can’t place that advert, and the Asians will go to Amsterdam or Frankfurt instead.”

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Reuters

Image caption

Frankfurt could benefit from Brexit, according to the head of the Eurogroup of finance ministers

However, Mr Lyons, an economic advisor to Boris Johnson, said European cities would find it difficult to displace London as a financial centre.

“We have the depth of skills, knowledge and experience that’s hard to replicate,” Mr Lyons, who backed the Leave camp, told the BBC.

Passporting for finance firms is a “negotiable issue”, he said, particularly as several European banks also use those rules to access the UK.

‘Shift’

Earlier, Alan Greenspan, a former chairman of the US Federal Reserve, said the biggest impact from the UK’s Leave vote would be on “issues of finance”.

“London is a key indispensible financial centre, and there’s nothing like it including New York. What concerns me is that the focus is going to shift to other areas of economic union; Frankfurt, Paris, or what have you,” Mr Greenspan said in an interview with the BBC.

TheCityUK, a group which represents most of the City of London’s big employers, has called on the government to secure “continuing access to the single market”.

Jamie Dimon, chief executive of JP Morgan – which employs 16,000 people in the UK – said the bank “may need to make changes to our European legal entity structure and the location of some roles”.

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City firms may lose "prized" EU access, says French Bank chief
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