Standard Chartered has said plans for its new EU hub in Frankfurt were at an advanced stage, having set up a management board and launched a hiring spree as the bank continues to ready itself for a worst-case Brexit.
The lender announced last year that it was looking to set up a subsidiary in the German financial centre, and was now expecting to see its licensing application approved by the spring.
“Unlike many of our peer banks, we have no legal entity in the EU outside of the UK, so we took a decision quite early on, about a year ago, that we would hope for the best, prepare for worst,” Tracy Clarke, Standard Chartered’s regional chief executive for Europe and the Americas said.
“So we’re planning to set up an EU sub in Frankfurt and we’ve made that very public and we’re very well advanced in that process.”
Standard Chartered has so far booked the majority of its EU business out of London, but those practices are expected to change.
“We have submitted our licence application, we’re expecting to hear in the spring,” she said during a panel at a Brexit summit arranged by City & Financial Global.
“We’ve set up a supervisory board, and a management board and we’re hiring, so we’re pretty far advanced.”
She said that while the banks wanted to look positive on Brexit impact, the financial services industry would suffer from losing some economy of scale, fragmentation of balance sheets, and higher costs that could impact clients.
However, Ms Clarke maintained that London would remain a resilient financial centre in “whatever scenario”, with its ecosystem unlikely to be “rebuilt overnight” elsewhere.
UK-based banks and insurers are widely expected to start pulling the trigger on Brexit contingency plans by the end of the first quarter, when the UK will be about 12 months away from leaving the EU.
That prospect has prompted urgent calls for a transition deal that would extend the period when financial services firms can benefit from cross-border access across the bloc under passporting rules.
But Ms Clarke said a transition deal was unlikely to result in a reversal of current plans.
“A transition agreement for us probably doesn’t really change anything,” she said. “All it does is give us more time to do what we planned to do anyway.”
She added that once a complex project like this is in motion “it is difficult to turn that off”.
“The overriding concern is with our clients, so our clients are looking for clarity and certainty about how we will cover and where we will be booking their transactions.”