the strategy of Prudential and HSBC after the Brexit announcement
After the announcement of an hypothesis Brexit and after the confirmation of what would happen, company took some guidelines to follow. Among those companies, two banks explain about what is the future for their employees, and structure in England. Those international banks are HSBC & Prudential.
“Well, Wells is actually a giant retail bank that doesn’t do all that much business in Europe. The big investment banks that do, and that fuel the City of London, have taken a rather different view to it.HSBC warned that it could shift jobs to Paris in the event of an “out” vote before the EU referendum. Its US peers have been saying much the same thing in its aftermath. At the start of the month Goldman Sachs warned that it may have to “restructure” its UK operations which currently employ about 6,000 people. JP Morgan’s chief executive Jamie Dimon earlier said that his bank might have to move thousands of employees to other European centres. Similar noises have been rumoured at Morgan Stanley.”
“HSBC, for one, thinks that abandoning the 2020 target could give him room to hike borrowing by £50bn in the next financial year. The aim would be to spend the money on infrastructure, thus pepping up a stalling economy. It might even work. But it might not.”
“The result sets the U.K. up for years of bitter divorce talks with the first salvos likely to be fired at an EU leaders’ summit next week. The U.K. must now count the economic and financial cost of an exit that Cameron warned would spark a recession. JPMorgan Chase & Co. and HSBC Holdings Plc have said a so-called Brexit would lead them to move thousands of jobs out of London.”
“HSBC, which earlier this year opted to keep its headquarters in London, plunged 3.7 percent in London trading. The selloff was compounded by the fact that markets had rallied over the past week on optimism that the U.K. would vote to stay.”
“The answer to the question is absolutely not – it does not change our business strategy just because the UK voted to leave Europe. It will, of course, change the way that our commercial, retail and private bank customers may need our support, particularly in the next few years.
The UK will continue to be a key part of our global network. It is one of our two home markets – the other being Hong Kong. It is also the home to our global headquarters and that will not change – we remain headquartered in London.
The relocation of HSBC UK’s head office will begin at the end of 2017 and will bring 1,200 jobs to Birmingham.
« We see Birmingham as the centre of a £110bn regional economy, » Hinshelwood added. « It has the largest concentration of businesses outside of London, home to 37,000 companies and it really gives us an opportunity to contribute to regional growth. »
HSBC UK will be based at a 210,000 sq ft office at Two Arena Central (pictured). At the time, the agreement of a 250-year lease with Arena Central Developments was the largest property deal in the city since 2002.”
On the other side, Prudential adopt also some guidelines for after the Brexit.
Prudential, the UK’s largest insurer by value, has said it is considering shifting funds from M&G, its assets management business, to Dublin or Luxembourg following UK’s vote to leave the EU.
A tenth of Prudential’s M&G’s £255.4 billion in assets under management are from EU clients.
Anne Richard, the chief executive of M&G, said the decision to move assets will depend on the outcome of UK’s negotiations with the EU.
« What we are trying to do as a business is give ourselves options so we are in a position to react and adapt to whatever negotiations come through over the next year or so regarding Brexit, » Richard said.
« We have, at the moment, business domiciled in both Dublin and Luxemburg so both of those would potentially be options for us if we felt that we should have additional funds domiciled in continental Europe, » she added.
British insurers were hit hard in the immediate aftermath of the Brexit vote, with share prices tumbling on expectations that the fallout in the broader economy would hurt the firms.
« On Brexit it is a challenge for the whole industry in that we don’t know exactly what form it will take. Will there be fund passporting from the UK to Europe, and vice versa, or not? » Richard said.
The news that Prudential UK operations could be hit by Brexit came as the group released its first half results.
Prudential posted a 6 per cent increase in first-half profit as a jump in earnings at its Asia business helped it to beat analyst estimates and offset lower profits from M&G
M&G’s operating profit declined by 10 per cent to £225 million.