As Revolut applies for a European banking licence – along with 20 global banks – the lack of progress in Brexit negotiations is raising doubt in the minds of financial and fintech executives.
The Financial Times reports today that Revolut, a UK-based currency and cash management fintech company, is applying for a European banking licence in anticipation of a hard Brexit or no-deal scenario come March 2019. The European licence would enable Revolut to continue to provide services to its customers across Europe once Britain is no longer part of the EU. The newspaper said that the application “is aimed at turning Revolut into an app-based bank so that it can deliver deposit and credit services in Europe, with a view to expanding globally”.
The FT also reports that around 20 global banks with European subsidiaries in the UK have already applied for EU banking licences. Some banks have expressed concerns over the lack of progress in Brexit negotiations, including the Bank of England, which warned last week that the City could lose 10,000 jobs immediately when Britain leaves the European Union, with the potential for up to 75,000 job losses in the longer term. The figures were based on data supplied by 400 banks and financial firms, which were asked to submit their contingency plans for a hard Brexit.
Consultancy firm Oliver Wyman also estimates heavy losses for London's financial industry in the case of a hard Brexit, or if no deal is reached with the EU. The firm said that a hard Brexit scenario, in which the UK would have to trade with the EU on World Trade Organisation (WTO) rules, would put trade, jobs and tax at risk as follows:
- 40-50 per cent of EU-related activity (approximately £18-20 billion in revenue);
- up to an estimated 31-35,000 jobs could be at risk; and
- approximately £3-5BN of tax revenues a year.
Some of the global banks that have been voicing doubt over the British government's plans to leave the EU include Goldman Sachs, HSBC and JP Morgan. Executives from those banks are reported to have recently met US commerce secretary Wilbur Ross to discuss their potential relocation plans in the face of Brexit. This comes on the heels of Goldman Sachs's Lloyd Bankfein's tweet last month, which said he was looking forward to spending more time in Frankfurt in future.
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