Group 10: The reaction and adaptation of Prudential and HSBC after the Brexit announcement

    According to the U.K. newspaper « independent », HSBC is planning to transfer a thousand jobs of jobs from London to Paris because of the Brexit. Indeed, Goldman Sachs warned that it may have to “restructure” its UK operations which currently employ about 6,000 people. So, 1000 jobs at the bank’s offices in London are involved with products covered by EU legislation, which probably need to move to France when the UK leaves the single market.

The CEO of HSBC, Stuart Gulliver said that among the various domain of banking in the UK, it is the investment sector in world markets that would be affected by the exit of the unique market confirmed by the British Prime Minister. Gulliver emphasized that the sector that is expected to be displaced concerns about 20% of the revenues of its investment bank based in UK, adding that foreign exchange, bond and equity markets should not be displaced.

 

   Apart from its market activities, HSBC has two other entities in the United Kingdom, which it will not modify despite Brexit: its global headquarters, which HSBC has decided to maintain in London, and its retail bank specifically responsible for British customers.

 These statements by the Director of HSBC came after the speech of British Prime Minister Theresa May. After several speculations that London would seek to make a « soft Brexit », Theresa May finally pronounced itself for a « hard Brexit” and a complete exit of the single market which pushed HSBC to move on Paris.

   This job transfer results from a prudential strategy and can be explain by the fact that the U.K.’s money, the pound, will soon loose a lot of value and so, the great  Britain will face a strong inflation at the end of the following year. HSBC forecasted that inflation could increase by 4 per cent within 18 month after the pound sterling’s Brexit induced collapse.
    The FTSE 100 dropped into the red after the referendum. Its retreat was short lived and Brexit backers have been able to point to its recovery as evidence of Britain’s strength. That’s disingenuous at best. The index is dominated by big multinational companies that make most of their money overseas: mining companies, banks and pharmaceutical outfits with profits largely denominated in dollars or dollar linked currencies. They are thus shielded from the Brexit beat down. The UK is only a small component of their business.

   HSBC is not the only company that wants to move its business. These relocations will be made in order to always have access to the single market of the European Union after Britain announced that it is out of the EU.

Prudential, the largest insurer of UK, said some operations of London such as the M & G fund management division and asset management business should be moved to Dublin or Luxembourg.

One tenth of Prudential M & G’s assets under management, amounting to € 255.4 billion, comes mainly from customers in the EU.

The brexit pushed British insurance to relocate following stock prices that fell sharply.

References: https://www.google.fr/amp/www.independent.co.uk/news/business/news/brexit-latest-news-hsbc-bank-move-20-per-cent-fifth-london-banking-operations-paris-chief-executive-a7532711.html%3Famp?client=safari

http://www.telegraph.co.uk/business/2016/06/30/hsbc-plays-down-chance-of-moving-1000-jobs-out-of-london-on-brex/

http://www.bbc.com/news/business-36629745

http://www.independent.co.uk/news/business/news/brexit-latest-news-eu-referendum-prudential-mg-insurance-fund-management-assets-a7183021.html

https://www.theguardian.com/business/2016/aug/10/prudential-may-relocate-m-and-g-funds-brexit-vote

 

 

Laisser un commentaire

Votre adresse de messagerie ne sera pas publiée. Les champs obligatoires sont indiqués avec *