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LONDON — Deutsche Bank CEO John Cryan told employees that the German lender is preparing for a hard Brexit in which roles will "inevitably" move from London to Frankfurt.
Cryan said in a video announcement on July 11 that the bank "will assume a reasonable worst outcome" from the UK's talks with the European Union, according to a Bloomberg News report.
"The worst is always likely to be worse than people can imagine," Cryan said.
Deutsche Bank operates a branch in the UK, and while London is one of the firm's major investment banking hubs, Cryan said he will move "the vast majority" of the markets balance sheet to Frankfurt. As a result, some roles will move too.
"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 minimize disruption for our clients and for our own people, but inevitably roles will need to be either moved or at least added in Frankfurt."
"We will try to minimize disruption for our clients and for our own people, but inevitably roles will need to be either moved or at least added in Frankfurt."
Deutsche Bank's chief regulatory officer has warned that the bank may be forced to move up to 4,000 staff from the UK to Europe as a result of Brexit.
Sylvie Matherat said earlier this year that client demands and pressure from regulators could combine to force almost half of Deutsche's 9,000 UK staff to relocate to Europe.
"For front office people, if you want to deal with an EU client, you need to be based in the EU. Does it mean I have to move all the front office people to Germany or not? We’re speaking of 2,000 people," Matherat said in April.
"Then you have the local supervisors who rightly say, come on, if you have your client here, if you book your operation here, you need to have your risk management capacity here. It means another 2,000 people."
Financial centres across the EU — including Frankfurt, Paris, Dublin, and Luxembourg — are battling to attract financial services work moving out of London as a result of Brexit as a result of expected legal changes that will make operating in the EU out of London tricky.
Britain is expected to lose financial passporting rights, which allow banks with a base in the UK to sell products and services to customers and financial markets across the EU.
Frankfurt is emerging as a popular destination for many international firms choosing a post-Brexit base. Three Japanese lenders, Daiwa, Sumitomo Mitsui Financial Group, and Nomura, have all confirmed in recent weeks that they will set up new post-Brexit bases in Frankfurt.