London set to remain financial services capital as over 1000 EU firms plan to open UK offices

20 January 2020 | Global, UK & Europe | Press releases

NEWS RELEASE: More than 1,400 EU-based firms have applied for permission to operate in the UK after Brexit, with over 1,000 of these planning to establish their first UK office, according to a Freedom of Information request (FOI) by financial regulatory consultancy Bovill. The FOI provides evidence that London and the UK will continue to be a leading player on the global financial stage after Brexit.
The FOI revealed that by October 2019, the FCA had received a total of 1,441 applications from firms to use the Temporary Permission Regime (TPR). When the current passporting system becomes defunct, the TPR will allow European Economic Area firms and funds to continue to operate in the UK, whilst they seek full authorisation from UK regulators.
The FOI also found that 83% of passporting firms that applied under the TPR currently operate under a ‘service’ passport, which means they do not currently have an office in the UK. This suggests that over 1,000 firms intend to set up an office in the UK for the first time after Brexit.
The FOI also shared the breakdown of firm type for those that have applied for the TPR. This includes more than 100 banks, which will either be setting up offices in London for the first time or boosting their current UK presence. Firms planning to move to the UK span all sectors in financial services including asset managers, insurers, exchanges and fintech firms.
Michael Johnson, a consultant at Bovill, commented:
“These figures clearly show that many firms see the UK as Europe’s premier financial services hub. This is a clear vote of confidence in the UK financial services sector and good news for the UK’s service economy overall. The high proportion of firms without an existing UK branch that have applied for the TPR suggests there will be some movement of staff from these EU27 firms into the UK.
“Although much attention has been given to the number of UK firms moving staff and operations into Europe, there is also likely to be movement in the opposite direction. The results of the FOI may have been anticipated by those in the industry, many of whom have recognised for some time that London remains Europe’s only truly global financial centre, and firms on the continent with global aspirations will need to continue to do business here.”
The FOI gave a further breakdown of TPR submissions by the firm’s home state. The country from which the highest number of firms sent TPR submissions was Ireland at 228. Second was France with 170 submissions, Cyprus was third and Germany was fourth, with 165 and 149 submissions respectively.
Michael Johnson continued:
“The fact that Ireland tops the list is perhaps to be expected, given how interlinked the UK and Irish economies are and their shared strength in asset management. These numbers tell us that Irish firms want to continue this close relationship post Brexit and believe that a presence in London would be beneficial to them.
“With many French and German firms intending to establish a presence in the UK, coupled with the fact that France and Germany will be driving much of the EU’s future trade negotiation with the UK, it is clearly in the economic interest of both sides to secure a trade deal that benefits everyone.
“The position of Cyprus in the top four home states is more surprising. Cyprus is often used as a base for firms that want to be subject to a regulatory regime perceived as ‘lighter touch’ in order to passport into more tightly regulated jurisdictions such as the UK. Firms that have based themselves in a ‘light touch’ jurisdiction to take advantage of regulatory arbitrage, and now want to set up their business in the UK, may need to revisit their regulatory compliance if they wish to continue doing business in Europe’s largest financial services market.”
Ed O’Bree, a partner at Bovill, concluded:
“In practical terms, these figures mean that European firms will be buying office space, hiring staff and engaging legal and professional advisers in the UK. This augurs well for the UK economy, as the country will retain its reputation as a prime location for financial services in Europe.”
For further information, please contact:
Polly Barton – Bovill
+44 (0)20 7620 8440
pbarton@bovill.com
Jos Kelly / Tabitha Adams – Linstock Communications
078 080 20673 / 075 000 13062
bovill@linstockcommunications.com

Footnotes

[1] 1,441
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