Will Britain piss off and get on with Brexit II (mod warning in OP)

CelticRambler

theological wrote: »

London is the only European city in the world's top 10 financial services centres.

That depends on who and what you read. This ranking adds Frankfurt and Zurich to the top 10:

Top 10 Financial Centers

1 New York City
2 London
3 Hong Kong
4 Singapore
5 Shanghai
6 Tokyo
7 Toronto
8 Zurich
9 Beijing
10 Frankfurt

More to the point, five of those top ten are in Asia, so once again, what's London's real advantage from a functional point of view?

On a different point, London provides "all kinds of everything" in relation to financial services, which is understandably seen as a positive attribute from one perspective, but also creates an "all eggs in one basket" scenario. Early indications are that the transfer of EU business will spread this business across different cities, sector by sector. So Dublin is becoming the insurance captial, Frankfurt is picking up banking services, Paris is taking asset-management and unit trusts are going to Luxembourg.

Oversight of the whole lot by the ECB makes the precise location of where in the EU these activities take place less relevant, and having them spread widely across the region makes them less susceptible to sudden, overwhelming disruption e.g. as a result of a major terrorist event. If that logic is accepted by the industry and the Eurozone countries, then it is something that will gather pace as different cities bid for the business and themselves invest in whatever infrastructure is needed to make it happen.

joeguevara

theological wrote: »

Every bank in your article is moving hundreds not thousands. And I agree for some functions a small number of people will need to move to work in EU member states.

There are 300,000 people working in the financial services industry in London. I think it's fair to say yes there have been (mostly they are done already) small moves out of the City to the EU, but the lions share are staying there.

To get a bank authorised in Ireland by the Cemtral Bank of Ireland takes close to a year. A Funds Management Company 7-9 months. MiFID Investment Company 6-9 months. insurance Undertaking g about a year. Not only the time the cash resources and people resources to prepare the application, the underlying business plan, programme of operations, policies, processes, systems and controls is huge. The reasonS why you haven’t the large scale moving of financial entities is numerous. Firstly even with all the warnings of the possibility of Brexit, nobody took the threat that serious. New AML required large scale implementation, same as GDPR, same as cyber security, Consumer Protection updates, esma guidelines (list goes in). Business Units, Compliance! Risk, IT, internal audit Legal,were at breaking point trying to get things that were definite done. Not only didn’t they believe that Brexit wasn’t going to happen, they didn’t have the resources to set about getting a new EU entity authorised. In Risk Appetite Statements Brexit Risk was low, and notwithstanding that to mitigate it even further, all the guidance coming from the U.K. was that the U.K. would be treated as third country with passporting rights.

When Brexit did happen the Sh1t hit the fan. They were basically starting from scratch on how to move International Head Offices to within the EU ensuring business continuity for customers and assurances to regulators that the new entity would be adequately resourced with fit and proper people. Now it’s as not as simple as banging an application form to a regulator and job done. They would firstly have to have chosen an appropriate location. Then find a building. Then start the legal process and map out each person who will take over the new role. People who didn’t want to move would probably be suitable for redundancy. Then relocating entire workforce’s would have to be planned, schools, homes etc. This is not something that just takes place overnight. Also the European Head Quarters of Insurance Company’s and Banks are a systemic risk for the entire EU financial system and therefore probably would double the length of an authorisation.

modelling, stress testing, solvency testing, liquidity testing would have to go about three stages with the local regulators and then same again with ECB. Central Bank is processing 100 banks insurers and asset managers.

Even Brexit did come there was uncertainty especially as Theresa May floundered. firms didn’t want to push the relocation which would eat in considerably to the bottom line if it was going to be a wasted exercise. Therefore the time taken to get authorised, the sheer project management of moving, as well as additional regulatory requirements makes things move at a snails pace.

Also, we have a years transition and a lot of firms are still hedging that they will be allowed to move.

Let’s face it any EU business that the U.K. had will be gone in 11 months. The sheer loss of that revenue as well every tax revenue that employees had, car tax, property tax, council tax, everything would dwarf any saving that U.K. will make because of ceasing to be a net contributor.

Politicians who are usually so far removed from the operations of a regulated entity are chuckling to themselves that there is minimal interest and it’s Round 1 to the U.K. wil some shock when the tsunami of revenue, people, jobs and it everything that it creates will rip through the City and bring it all over the EU.

cryptocurrency

Rabb is the latest to say level playing field is gone ...well, no alignment anyway

theological

joeguevara wrote: »

Let’s face it any EU business that the U.K. had will be gone in 11 months. The sheer loss of that revenue as well every tax revenue that employees had, car tax, property tax, council tax, everything would dwarf any saving that U.K. will make because of ceasing to be a net contributor.

This is the line that you've not substantiated. If American exchanges are able to take EU trading (for example the CME) there is no reason why the same status will not be granted to the City. Not doing so would be harmful for the EU also.

There's also no point pre-empting the outcome of the negotiation. You're not Nostradamus and neither am I.

You also seem to have ignored the fact that the FCA asked banks to give clear Brexit plans. Many have been acted upon already. Many already have EU legal entities. I'm not sure why you believe there's a lot more moving to be done.

Kidchameleon

Professor Moriarty wrote: »

Here's what you said:

"Britain is not in control over its own destiny because Ireland is in the EU".

Nobody has said that but you. And it is utterly wrong.

Eh, I didnt mean that. I was clearly taking the p1ss out of another poster

Beasty

Kidchameleon wrote: »

Eh, I didnt mean that. I was clearly taking the p1ss out of another poster

That's a brave admission to make. Do not take the p1ss out of other posters again

Any questions PM me - do not respond to this post in-thread

joeguevara

theological wrote: »

This is the line that you've not substantiated. If American exchanges are able to take EU trading (for example the CME) there is no reason why the same status will not be granted to the City. Not doing so would be harmful for the EU also.

There's also no point pre-empting the outcome of the negotiation. You're not Nostradamus and neither am I.

You also seem to have ignored the fact that the FCA asked banks to give clear Brexit plans. Many have been acted upon already. Many already have EU legal entities. I'm not sure why you believe there's a lot more moving to be done.

OK firstly when I said EU Business I was talking about Banking, Insurance, investment Firms, Fund Management, Funds. I had listed them. They cannot within the Eu to Eu customers without being Regulared in the EU. Special Passporting rights for EEA entities is granted because they signed together a contract, The U.K. has cancelled their membership of the EEA and said they will not be joining.

You say I am not Nostradamus. You are correct because he talked sh1t and only after things happened could they shoehorn it into a prophecy. I am going to be quite clear about this. The business I mentioned above will not remain in the U.K. Can you give me any clear substantiated evidence or Law or precedent which backs you up.

Can you clarify what you mean that American Exchanges are taking EU trading. you mentioned CME. Firstly they have a European Office but that is irrelevant. An American Exchange House purchases publicly available trades on an EU regulated trading platform. So a trade is executed in the EU. The US Regulated entity is servicing its US Clients. Note a US Regulated is not servicing EU clients. Similarly as U.K. entity can purchase thimgs for its U.K. client. They can’t purchase or do anything for EU clients.

So to substantiate the sentence. UK will not be able to carry out any of the industries I listed for EU clients.

theological

Yes, but again, most of the large investment banks have other legal entities in other EU countries. In many cases it's happened already. So it is possible for them to continue operating. The same is probably true for the insurance firms and legal firms we're speaking of also. It doesn't even require large moves just ensuring that trades are booked to the correct legal entity when executing.

So my estimation is that you're being overly dramatic.

Leroy42

But you are talking about 100's on companies moving 100's of jobs as almost nothing! And the big danger is that it starts a move away from London. People are creatures of habit. If the office is already in London, why bother setting up another main office in Frankfurt/Dublin or where ever when there is no operational advantage.

But that changes if they no longer have direct access. It then requires an office in the EU. And once things start to move, others will be happier to move. Why have your top guys in London when the main trades are handled in Frankfurt/Dublin.

So like most of Brexit it won't happen overnight, although the signs so far are pretty dangerous, it will only be after a number of years when one look back at notices that something has changed. At that point it wil be too late.

One thing that seems to stick out though is the feeling that the dominance of London is unassailable. But we know that other countries are always looking to take their share of it and Brexit gives a massive chance of that increasing in likelihood.

As I said before, I fully predict that the EU will not allow itself to be dependent on the banking system of a third country that is clearly volatile and will likely actually threaten access to that system before the year is out as a bargaining chip. Even something as simple as GDPR which the UK has no interest in following will have consequences I'd imagine.

Moves will be made to transfer all this into the EU over the coming decade, for economic security if nothing else. It is an abject lie to say that this cannot happen or that only London has the capability to run a global financial hub when there are numerous around the world. The end result will be a smaller financial sector in London and passporting withdrawn.

joeguevara

theological wrote: »

Yes, but again, most of the large investment banks have other legal entities in other EU countries. In many cases it's happened already. So it is possible for them to continue operating. The same is probably true for the insurance firms and legal firms we're speaking of also. It doesn't even require large moves just ensuring that trades are booked to the correct legal entity when executing.

So my estimation is that you're being overly dramatic.

But that is the issue. Simply having a legal entity state more often than not isn’t enough. Usually the entities you mention aren’t individually regulated by an EU regulator and are using its parent authorisation to operate. An Investment Firm authorised in its own right has to have its own segregated liquidity. This is a considerable amount and would be rare if had a head office in U.K. previously.

So based on that these legal entities will have to be authorised. Will have to have it’s own board and senior management. Key regulated functions will have to be housed there rather than outsourced back to the UK entity. Profits will be individually taxed in the EU and U.K. will lose that revenue.

It’s not being dramatic. It’s just stating what’s going to happen.

Also if U.K. entities ignore this and provide EU regulated activism they will be fined. They will receive a cease and desist. They will be publically reprimanded where reputational damage will follow. Saying that it’s overly dramatic to call this out is ignoring the issue and following rhetoric that is simply false.

joeguevara

I wanted to temper my points above with something that I should have done. Financially regulated entities in the EU who previously passported into the U.K. to service U.K. will lose their ability to do so and they will have to open UK entities to do so or else sell their UK book of business.

Therefore any financial and resource loss because of U.K. entities having to set up separate EU entities will be reduced by the flow going the other way. If I was Head of Strategy in either type I would now be considering whether any partnership arrangements could be arranged where both could benefit.

Apologies for not including this in my earlier post.

Peregrinus

joeguevara wrote: »

I wanted to temper my points above with something that I should have done. Financially regulated entities in the EU who previously passported into the U.K. to service U.K. will lose their ability to do so and they will have to open UK entities to do so or else sell their UK book of business . . .

This is true, but in the context it's a nitpick.

The whole point about being a global financial services centire is that London (New York, Frankfurt . . .) is exporting financial services; it's selling them to the world. There may be associated imports to support this trade, but the whole point is that the exports vastly exceed the imports. Erecting barriers to the free flow of financial services will affect the imports and develop a certain amount of import substitution, but the net effect will still be hugely detrimental to a global financial centre, precisely because it is a global financial centre.

theological

joeguevara wrote: »

I wanted to temper my points above with something that I should have done. Financially regulated entities in the EU who previously passported into the U.K. to service U.K. will lose their ability to do so and they will have to open UK entities to do so or else sell their UK book of business.

Most have a UK entity now too. This is one of the things that was done years ago. When the FCA gave advice to banks and other institutions to trade setting up a UK entity would have been obvious.

I'm yet to see how anything you're discussing is as catastrophic as you imagine.

joeguevara

Peregrinus wrote: »

This is true, but in the context it's a nitpick.

The whole point about being a global financial services centire is that London (New York, Frankfurt . . .) is exporting financial services; it's selling them to the world. There may be associated imports to support this trade, but the whole point is that the exports vastly exceed the imports. Erecting barriers to the free flow of financial services will affect the imports and develop a certain amount of import substitution, but the net effect will still be hugely detrimental to a global financial centre, precisely because it is a global financial centre.

I can’t really nitpick myself though. In my previous posts I stated that U.K. will lose the EU and because Switzerland need access to EU which was predominantly done via passporting from U.K. will lose that as well. i believe that will be a huge impact in a bad way. The post you quoted was just to be fair and say there will be negative consequences for EU as it will lose its U.K. business but that partnership between a UL entity and an EU one.

I think another major issue is international houses who sell world wide would originally have chosen London as it was in the EU. Without that commercial advantage consideration of whether there is a better commercial advantage elsewhere will move to the top of the agenda. This is what is known as the Glacial Melt. Commercial property rents in London are high and if an entity loses considerable income (Eu business) then the rental price may become unviable for the Company. business parts may be carved out. Now this is opinion but definitely cost savings existed because all markets could be housed under one roof. IT, legal, compliance, risk etc. Because they can’t be housed under one roof,all of the cons to leave London may outweigh the pros.

cryptocurrency

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

How does the above article work with the countless cries of remainers about the UK car industry?

cryptocurrency

Deleted User wrote: »

As I said before, I fully predict that the EU will not allow itself to be dependent on the banking system of a third country that is clearly volatile and will likely actually threaten access to that system before the year is out as a bargaining chip. Even something as simple as GDPR which the UK has no interest in following will have consequences I'd imagine.

Moves will be made to transfer all this into the EU over the coming decade, for economic security if nothing else. It is an abject lie to say that this cannot happen or that only London has the capability to run a global financial hub when there are numerous around the world. The end result will be a smaller financial sector in London and passporting withdrawn.

I don't think they will have a choice. You don't just built a global financial centre overnight and the EU don't have any which are even at the races at the moment.

cryptocurrency

cryptocurrency wrote: »

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

How does the above article work with the countless cries of remainers about the UK car industry?

Interesting business approach. Could work out well for them and there be Nissans everywhere on British roads.

The company believes that if rival carmakers face tariffs on the vehicles they sell into the British market, they would have a massive competitive advantage.

That would potentially allow them to increase their UK market share from 4% at the moment to 20%.


"We’ve modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs.

cryptocurrency

Deleted User wrote: »

Interesting business approach. Could work out well for them and there be Nissans everywhere on British roads.

The company believes that if rival carmakers face tariffs on the vehicles they sell into the British market, they would have a massive competitive advantage.

That would potentially allow them to increase their UK market share from 4% at the moment to 20%.


"We’ve modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs.

You can see other non EU car makers doing the same in the UK

cryptocurrency

cryptocurrency wrote: »

You can see other non EU car makers doing the same in the UK

Perhaps, if it makes financial sense. The more that do it, the less market share there is to divvy up, though.

cryptocurrency

The next ten months will be a massive reality check for Remainers. I am looking forward to the future of post brexit britain and am more optimistic then I have been in years.

You actually managed to talk about something substantial there for a while.. We nearly had you debating actual Brexit. But no, we're back to people and Remainers and the big winners and losers debate.

Could we not talk about Nissan for a while longer? Do you not have response to my post? You posted the story. Would you not like to really get into the nitty gritty of it?

Peregrinus

cryptocurrency wrote: »

https://www.politicshome.com/news/uk/foreign-affairs/brexit/news/109569/nissan-pull-out-europe-and-concentrate-uk-event-hard

How does the above article work with the countless cries of remainers about the UK car industry?

cryptocurrency wrote: »

You can see other non EU car makers doing the same in the UK

Brexit poses a challenge to challenge for everyone in the auto industry, but a slightly different challenge for all of them, depending on how they are situated. One of the factors particular to Nissan is that, of non-indigenous manufacturers in the UK market, they are far and away the biggest - much bigger than Toyota and Honda combined, who are number 2 and 3 respectively. That level of investment represents a huge sunk cost in the UK. They wouldn't like having to write it off.

The other preliminary point to bear in mind is that, although Brexit poses a big challenge to the motor industry, they don't yet know what that challenge is. Until the UK negotiates a trading arrnagement with the EU, or abandons the aspiration to do so, they have no idea what trading environment they are going to face, and the contradictory and rapidly-changing pronouncements of the last Tory government and the present one don't help. This makes planning for the challenge very difficult. The bigger players (including Nissan) respond to this by planning for a variety of different scenarios, from the close trading arrnagement with frictionless trade targetted (initially) by May to the no-trade-deal WTO-terms-only scenario that some still threaten and a few still desire.

Right. So this particular story is based on Nissan's planning for the no-deal WTO scenario. And Brexiters crowing about it are missing one of the main points: Nissan themselves are quoted in the article as saying "We’ve modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs". That's not good news, people, for Nissan or for the UK.

It seems that Nissan's damage limitation strategy will be to retain its investment in the UK. They calculate that other manufacturers with smaller investments in the UK and larger investments in the EU will take the opposite course, running down or closing outright their UK operations, and their offerings in the UK market will become more expensive, as they will be imported and will be subject to tariffs.

Nissan's cars, although manufactured in the UK, will also become more expensive because of tariffs on imported components, extra costs due to loss of just-in-time techniques, etc. Nissan can try to limit this by closing its own facilities in the EU and centralising production in the UK, so as to reduce the number of imported components/elements but, still, there'll be an impact.

None of this is good news for Nissan but, within the UK market, it presents them with a competitive opportunity; their cars, although more expensive, will be relatively cheaper than imported cars, so they should be able to increase market share in the UK, which may help to offset the loss of export sales to the EU. (Currently 70% of Nissan UK production is exported to the EU.)

They'll have to increase it a lot, since the total UK car market is likely to shrink (because cars will be more expensive overall). So, in a shrinking market, they have to fight for a larger share to offset increased costs and declining exports. Thereport says that this "would potentially allow them to increase their UK market share from 4% at the moment to 20%". But, actually, I suspect someone is putting a favourable spin on a rather more stark finding in the report; for this strategy to succeed, and Nissan UK to remain viable, they will need to increase their share of the UK market from the current 4% to 20%. That's a hell of an ask, but only if they think they can do that does the strategy of doubling down in Sunderland make sense.

If I were a Brexiter, I would not be calling attention to Nissan's dilemma.

cryptocurrency

Peregrinus wrote: »

Brexit poses a challenge to challenge for everyone in the auto industry, but a slightly different challenge for all of them, depending on how they are situated. One of the factors particular to Nissan is that, of non-indigenous manufacturers in the UK market, they are far and away the biggest - much bigger than Toyota and Honda combined, who are number 2 and 3 respectively. That level of investment represents a huge sunk cost in the UK. They wouldn't like having to write it off.

The other preliminary point to bear in mind is that, although Brexit poses a big challenge to the motor industry, they don't yet know what that challenge is. Until the UK negotiates a trading arrnagement with the EU, or abandons the aspiration to do so, they have no idea what trading environment they are going to face, and the contradictory and rapidly-changing pronouncements of the last Tory government and the present one don't help. This makes planning for the challenge very difficult. The bigger players (including Nissan) respond to this by planning for a variety of different scenarios, from the close trading arrnagement with frictionless trade targetted (initially) by May to the no-trade-deal WTO-terms-only scenario that some still threaten and a few still desire.

Right. So this particular story is based on Nissan's planning for the no-deal WTO scenario. And Brexiters crowing about it are missing one of the main points: Nissan themselves are quoted in the article as saying "We’ve modelled every possible ramification of Brexit and the fact remains that our entire business both in the UK and in Europe is not sustainable in the event of WTO tariffs". That's not good news, people, for Nissan or for the UK.

It seems that Nissan's damage limitation strategy will be to retain its investment in the UK. They calculate that other manufacturers with smaller investments in the UK and larger investments in the EU will take the opposite course, running down or closing outright their UK operations, and their offerings in the UK market will become more expensive, as they will be imported and will be subject to tariffs.

Nissan's cars, although manufactured in the UK, will also become more expensive because of tariffs on imported components, extra costs due to loss of just-in-time techniques, etc. Nissan can try to limit this by closing its own facilities in the EU and centralising production in the UK, so as to reduce the number of imported components/elements but, still, there'll be an impact.

None of this is good news for Nissan but, within the UK market, it presents them with a competitive opportunity; their cars, although more expensive, will be relatively cheaper than imported cars, so they should be able to increase market share in the UK, which may help to offset the loss of export sales to the EU. (Currently 70% of Nissan UK production is exported to the EU.)

They'll have to increase it a lot, since the total UK car market is likely to shrink (because cars will be more expensive overall). So, in a shrinking market, they have to fight for a larger share to offset increased costs and declining exports. Thereport says that this "would potentially allow them to increase their UK market share from 4% at the moment to 20%". But, actually, I suspect someone is putting a favourable spin on a rather more stark finding in the report; for this strategy to succeed, and Nissan UK to remain viable, they will need to increase their share of the UK market from the current 4% to 20%. That's a hell of an ask, but only if they think they can do that does the strategy of doubling down in Sunderland make sense.

If I were a Brexiter, I would not be calling attention to Nissan's dilemma.

But you are not a brexiteer. You are 100% behind the insular, socialist and protectionist EU.

I note Chief Secretary to the Treasury Rishi Sunak is now telling Kay Burley that the UK doesn't need a trade deal at all. I'm liking the cut of his gib.

Leroy42

cryptocurrency wrote: »

But you are not a brexiteer. You are 100% behind the insular, socialist and protectionist EU.

I note Chief Secretary to the Treasury Rishi Sunak is now telling Kay Burley that the UK doesn't need a trade deal at all. I'm liking the cut of his gib.

If they don't need a trade deal why did they sign up to the WA, with the billions of payments and the cutting off of NI from the internal union?

Sounds very much to me that their words and deeds and telling too very different stories, but words are cheap so put more faith in what they actually do rather than the PR bluster.

Peregrinus

cryptocurrency wrote: »

But you are not a brexiteer. You are 100% behind the insular, socialist and protectionist EU.

Which is why I'm happy to point out that Nissan is saying how ruinous a WTO-only Brexit would be for them. What puzzles me is why you are.

cryptocurrency wrote: »

I note Chief Secretary to the Treasury Rishi Sunak is now telling Kay Burley that the UK doesn't need a trade deal at all. I'm liking the cut of his gib.

So you like Nissan saying that no trade deal would be ruinous, and you like Sunak saying that no trade deal would be just fine?

Tell me, is this the position of a typical Brexit supporter, or are you unusual in your, um, intellectual flexibility?

cryptocurrency

Peregrinus wrote: »

Which is why I'm happy to point out that Nissan is saying how ruinous a WTO-only Brexit would be for them. What puzzles me is why you are.


So you like Nissan saying that no trade deal would be ruinous, and you like Sunak saying that no trade deal would be just fine?

Tell me, is this the position of a typical Brexit supporter, or are you unusual in your, um, intellectual flexibility?

I see the advantages in a complete cutting of any form of EU controls. Boris is making a speech today and is fully expected to double down on divergance again which is in line with everything Rabb, Javid and everyone else has been saying.

Peregrinus

Again with the impressive intellectual flexiblity! We're not talking about "EU controls" here; we are talking about WTO tariffs and their effect on the UK auto industry; try to stick to the point that you yourself raised, Crypto. Otherwise you look like someone desperately trying to change the subject, which is probably not a look you want to reach for.

cryptocurrency

Peregrinus wrote: »

Again with the impressive intellectual flexiblity! We're not talking about "EU controls" here; we are talking about WTO tariffs and their effect on the UK auto industry; try to stick to the point that you yourself raised, Crypto. Otherwise you look like someone desperately trying to change the subject, which is probably not a look you want to reach for.

It's like everything else, it's all drama and never materialises to anything. The EU is now saying the deal can be done this year and as usual is all over the shop. Thing is with the EU is not to talk to them but to talk at them, things move faster then.

Anyways, No time for long winded posts, I had a hetic weekend of brexit freedom parties, six nations and superbowl. Great weekend.

Nissan > Reality check for Remainers > Rishi Sunak saying this UK doesn't need a trade deal > Boris making a speech about divergance > The EU is all over the shop because they say a deal can be done

Mentions something and then just moves onto the next topic in the very next post without acknowledging anything that was said in response.