Global banks in search of a “New London” after Brexit.
As global banks begin scouting for a new European base in the wake of last month’s Brexit vote, it appears that the City of London’s glory days as the world’s most important financial center may be numbered. City-based banks and hedge funds are worried about losing their passporting rights, which grant them full access to the EU’s financial markets. They’re also concerned that the UK might lose its special authorization to clear transactions in euros.
“In theory, extending third-country AIFMD passporting to the U.K. after Brexit should be straight-forward,” Matt Huggett, a partner at law firm Allen & Overy in London, told Bloomberg. “In practice, it will be a political decision with an uncertain outcome. Many managers would like to safeguard themselves beforehand and set up offices in places like Luxembourg and Dublin.”
In true beggar-thy-neighbor fashion, many of Europe’s most prominent capitals are bending over backwards to provide global banks with the perfect enticements to lure them away from The City. As the New York Times puts it, “The race is on to be the new London”…
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