HSBC became the first major bank to detail plans to move jobs out of London after Brexit, saying it will relocate staff responsible for generating around a fifth of its U.K.-based trading revenue to Paris after Britain leaves the EU.
Major financial firms warned for months before Britain’s referendum on EU membership in June that they would move jobs out of the country if there was a vote to leave, but have set out few details since on how many will go or where to.
“We will move in about two years time when Brexit becomes effective,” the bank’s Chief Executive Stuart Gulliver told Reuters on Wednesday at the annual meeting of the World Economic Forum in Davos, in a potentially damaging first blow to London’s status as Europe’s main financial center.
Other banks are expected to announce more concrete plans for how they will adapt to Brexit in the coming months after Prime Minister Theresa May confirmed in a speech on Tuesday that Britain would leave the European single market.
HSBC, Europe’s biggest bank, is at an advantage to its major U.S. rivals as it already has a large subsidiary in Paris that holds most of the licences needed by an investment bank, meaning Gulliver has been able to set out more detailed plans.
It is expected to move around 1,000 staff who are involved in trading products such as European stocks that are regulated by the EU. HSBC’s global banking and markets division that houses those roles made profits of $384 million in the UK in 2015, according to a company filing.
The shift of jobs will be a blow to the City of London, which has been lobbying since the Brexit vote for financial firms in Britain to retain their EU ‘passporting rights’ which lets them sell their services across the bloc.
But passporting is unlikely to continue with Britain outside the European single market, and firms say they are now likely to press ahead with plans to move staff, even though May said she would try to negotiate some form of market access to the bloc.
The City’s best hope will be for the government to agree a transitional arrangement whereby finance firms can continue to operate out of Britain across the EU for a number of years after Brexit, in the hope that a favorable access deal is achieved in the interim.
“We would like to see a transitional agreement announced as soon as possible,” Mark Boleat, policy chairman at the City of London Corporation, said in a statement on Tuesday after May’s speech.