German banks plan hard Brexit, in ‘advanced’ stages of relocating from London

German banks are finding your way through a so-called “hard Brexit” and the spoils of the U.K.’s departure from europe could be shared by additional European cities, according to German banking and finance officials.

German central bank executive panel member Andreas Dombret said that German banks were planning for a hard Brexit – that the U.K. could keep the EU with no access to the single industry or customs union – amid increasing uncertainty above the progress of Brexit negotiations.

“Banks are preparing to a difficult Brexit because they don’t know what the results is and I believe that’s a wise move to make,” he said Tuesday, adding that lots of banks were planning on relocating out of London’s economic district.

An integral uncertainty for the U.K.’s financial market is how much access it will have to the EU content Brexit with many uncertainty over “passporting rights” which allow financial companies within the EU to run operations and provide services throughout the European Economic Region (which consists of the EU member states and also Norway, Iceland and Lichtenstein).

The U.K. want to retain those rights but that’s looking unlikely and several European banks could reduce as well as close their London office buildings. Deutsche Bank, Credit Suisse, JPMorgan, UBS and Normal Chartered will be among the banks that have all made noises about relocating, outlining ideas for European functions post Brexit.

Frankfurt and Dublin are perceived to end up being the very best destinations for London-based finance institutions looking to relocate, and also Paris with small amounts of information coming from bank officials regarding potential moves. HSBC’s CEO Stuart Gulliver verified in July that 1,000 staff could move to Paris if there is a “hard Brexit” situation while Goldman Sachs LEADER Lloyd Blankfein teased that the purchase bank could move to Germany.

Dombret told CNBC on Tuesday that banks would relocate to cities across Europe, not merely Frankfurt.

“To start with, banks can not only relocate to Frankfurt, they will also relocate to additional cities – Dublin may be the other large prospect – you will have firms likely to Paris and to Amsterdam, which isn’t bad, which implies that the chance will be dispersed around the euro area and it won’t maintain one city but also in a large amount of cities,” he told CNBC.

‘Worst case scenario’

With the clock ticking until the U.K.’s formal departure day of March 2019, there’s short amount of time to reduce if Britain wants to reach a trade manage the EU also to protect certain industries’ access to EU markets – such as for example banking. The alternative is that no package can be reached and Britain must fall back on Globe Trade Organization (WTO) rules.

Brexit negotiations have made little progress, however, with sticking tips above EU and U.K.’s citizens’ rights after Brexit, the Northern Ireland/Republic of Ireland border and ambivalence above a “divorce costs” detailing the U.K.’s financial commitments to the EU that it will honor.

However, Dombret insisted that additional EU cities were not fighting above the spoils of Brexit.

“We’re not in a race with other cities about who gets what, the results of the referendum is still disappointing but has to be acknowledged,” he said, noting a hard Brexit was the “worst case scenario.”

Even now, he said he had spoken to senior bankers in London who he said were “really advanced within their thinking” regarding Brexit preparation and he suggested that several institutions had made applications to relocate to Frankfurt.

“We are working with them in workshops to be able to try to make sure that there surely is a smooth changeover, as smooth as likely, and that people don’t work into any kind of financial balance risk, that i don’t see at this time.”

Germany looking attractive

It might end up being a great time to relocate to Germany with the economy looking buoyant. On Tuesday, official data showed the German economy grew 0.8 percent in the third quarter, exceeding economists’ expectations and picking right up from the 0.6 percent growth observed in the previous quarter.

The only uncertainty at this time is the authorities, with Chancellor Angela Merkel’s conservative bloc, the CSU-CDU seeking to form a coalition authorities with the pro-business Free of charge Democrats and the Greens, although preliminary talks have been slow and formal negotiations are however to begin.

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