Lloyd's of London confirms Brussels as EU base while Citi mulls future

(c) Sky News 2017: <a href="http://news.sky.com/story/lloyds-of-london-confirms-brussels-as-eu-base-in-brexit-shift-10818031">Lloyd's of London confirms Brussels as EU base while Citi mulls future</a>
 

Lloyd's of London is to shift around 100 jobs to the heart of the EU to limit potential damage to the world's biggest insurance market from Brexit.

It made the announcement, as Sky News reported , less than 24 hours after Theresa May began the formal process to commence divorce talks with the EU.

The company's lead was followed hours later by US bank Citi, which warned staff it could be be forced to relocate work from London under a "hard" Brexit scenario it was preparing for.

However, it confirmed London would remain its European headquarters.

The moves highlight the pressure felt by financial services firms to secure their continued access to the bloc once the UK leaves.

So-called passport rights - which currently allow them to trade seamlessly across borders - are expected to be lost following the negotiations.

Lloyd's, which derives 10% of its revenue from the EU, said it intended to have the Brussels office "ready to write business" for the 1 January 2019 renewal season, subject to regulatory approval.

It had considered Luxembourg instead.

Chief (Taiwan OTC: 3345.TWO - news) executive, Inga Beale, said: "It is important that we are able to provide the market and customers with an effective solution that means business can carry on without interruption when the UK leaves the EU.

"Brussels met the critical elements of providing a robust regulatory framework in a central European location, and will enable Lloyd's to continue to provide specialist underwriting expertise to our customers.

"I am excited about the opportunities this venture will offer the market by providing that important European access efficiently."

In his note to staff, Citi's European boss Jim Cowles wrote: "A hard Brexit would require certain changes, including relocating certain client-facing roles to the EU from the UK, and the possible creation of a new broker-dealer entity within the EU."

He added that the bank was already well positioned as it had operations in 20 of the remaining EU27 nations.

Planning for the divorce began in the City in the aftermath of last June's referendum.

Sky News recently revealed how Deutsche Bank (IOB: 0H7D.IL - news) had signed a 25-year lease on a new City base.

But Goldman Sachs signalled earlier this week that it was accelerating plans to create more jobs on the Continent, with its London-based operations calling a halt to expansion.

JPMorgan (LSE: JPIU.L - news) , HSBC and UBS (LSE: 0QNR.L - news) have also given strong indications that thousands of jobs may cross the Channel or go to Dublin.

Ms Beale called for the EU and UK to come to a sensible compromise in their looming divorce deal.

She (Munich: SOQ.MU - news) said: "It is now crucial that the UK Government and the European Union proceed to negotiate an agreement that allows business to continue to flow under the best possible conditions once the UK formally leaves the EU.

"I believe it is important not just for the City but also for Europe that we reach a mutually beneficial agreement. We stand ready to help and support the Government as best we can."

Lloyd's made the announcement as it published annual results - with 2016 profits flat on the previous 12 months.

It said pricing pressures made for an "extremely challenging" environment despite gross written premiums rising 11%.

Pre (Shanghai: 600048.SS - news) -tax profits came in a £2.1bn.

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