JPMorgan might eventually relocate all of its EU-focused business from London to Europe, the American investment bank's boss has said, warning that the city will need to “adapt and reinvent itself” after Brexit.
Jamie Dimon made the remarks in his annual letter to shareholders, in which he also wrote, “few winners are likely to emerge” from the UK's exit from the EU which will make financial services fragment across multiple cities that include Amsterdam, Frankfurt, Paris and Dublin.
The move will not certainly have a positive effect on the UK’s GDP, JPMorgan's chairman and chief executive noted.
"In the short run (ie, the next few years), this cannot possibly be a positive for the United Kingdom’s GDP – the effect after that will be completely based upon whether the United Kingdom has a comprehensive and well executed strategic plan that is acceptable to Europe."
Dimon said that "uncertainties linger" from Brexit, particularly around financial services. The Brexit trade deal agreed in December between the UK and EU only covered goods and not services.
“Brexit was accomplished, but many issues still need to be negotiated. And in those negotiations, Europe has had, and will continue to have, the upper hand."
The UK and EU are yet to reach a deal on financial services which are one of Britain’s most lucrative exports, with EU officials signaling that they are in no hurry to conclude an arrangement.
In the meantime, European financial hubs have been hoovering up business that had London dominated so far.
JPMorgan has nearly 19,000 people on the payroll in the UK including 12,000 in London, many of whom might have to move at some point, Dimon wrote.
"We may reach a tipping point many years out when it may make sense to move all functions that service Europe out of the United Kingdom and into continental Europe," he wrote. Paris, Frankfurt, Dublin and Amsterdam are the cities that might "grow in importance."
He described London as "a magnificent place to do business" with an "opportunity to adapt and reinvent itself" but warned that officials should act quickly.
"Innovation is key to preparing for doing the business of tomorrow versus relying on the shifting ways of the past," he wrote.
Dimon was one of those senior bankers who had warned the UK that Brexit would be bad for its financial services industry. Prior to the 2016 referendum, he had predicted that nearly 4,000 jobs might have to move if the country voted to leave the bloc.
So far the bank has moved hundreds, rather than thousands, of roles to the EU and according to EY, nearly 7,600 jobs have moved from the UK to the EU across the industry since the Brexit vote. However, experts at the consultancy noted jobs and assets were moving "incrementally."