(MENAFN- Gulf Times) Deutsche Bank is girding for a hard Brexit, with plans to book the 'vast majority of its trades in Frankfurt, chief executive officer John Cryan said in a videotaped message to its 98,000 employees.
'There's an awful lot of detail to be ironed out and agreed, depending on what the rules and regulations turn out to be, Cryan said in the video. 'We will try to minimise disruption for our clients and for our own people, but inevitably roles will need to be either moved or at least added in Frankfurt.
A year after Britons voted to pull out of the European Union, banks are starting to prepare employees for the repercussions, which may include moving some London operations. The turmoil around Brexit dovetails with Cryan's desire to concentrate more business at Deutsche Bank's base in Frankfurt, Germany's financial hub.
The CEO said that the bank can't afford to postpone decisions on Brexit pending the outcome of negotiations on Britain's future relationship with the EU. Although Deutsche Bank won't need to set up a new subsidiary on the continent — unlike some non-EU rivals — it is likely Brexit 'will impact us significantly, he said.
People familiar with the tape said it was recently posted on the bank's intranet and shows Cryan being interviewed by the chief of communications, Joerg Eigendorf. The people declined to be identified discussing internal matters. A spokeswoman for the bank, Monika Schaller, declined to comment.
Deutsche Bank plans to move chunks of trading and investment-banking assets currently booked in London to Frankfurt, people told Bloomberg this month. The jobs of several hundred traders and as many as 20,000 client accounts will likely be shifted, one person said.
Frankfurt has emerged as a winner of the Brexit vote, with Standard Chartered Plc, Nomura Holdings, Sumitomo Mitsui Financial Group and Daiwa Securities Group all picking the city as their EU hub in recent weeks. Morgan Stanley and Citigroup also have settled on Frankfurt for their European trading headquarters, people have said.
Banks have struggled to quantify Brexit risks to their business because so many unknowns surround Britain's future relationship with the EU. At stake is the right of companies based in Britain, home to Europe's biggest financial centre, to sell products and services in the rest of the EU, a risk that has come to be known in the industry as a hard Brexit.
For Deutsche Bank, one of the biggest questions is where to book trades. Cryan said a big share of its assets are recorded in its London branch for convenience. While that need not completely change, Deutsche 'will probably book the vast majority of that in the future in Frankfurt.
Clients shouldn't mind and traders would still be able to take orders and record them in London or in New York, he said. The bank is setting up a structure in Frankfurt that duplicates its system in London so that both cities could be used interchangeably during the transition to Britain's new status.
Brexit isn't necessarily a disaster for London, said Cryan, who is British. It could even be a source of new business for banks, because clients are seeking advice on what to expect, he said, citing the case of where to buy bonds issued by European governments.
'We will assume a reasonable worst outcome, rather than a worst case, Cryan said.
'The worst is always likely to be worse than people can imagine.
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