City of London sticks to Brexit plans despite progress

LONDON – London’s financial industry welcomed progress on a divorce deal with the European Union on Friday but said it saw little reason to alter preparations for when Britain leaves the EU.

The agreement on Friday paves the way for arduous trade talks, easing immediate pressure on Prime Minister Theresa May and boosting hopes of an orderly Brexit.

Banks in Britain are preparing to move an estimated 10,000 jobs to the continent after Brexit in order to maintain full access to the single market.

Insurance specialist Lloyd’s of London [SOLYD.UL] was among the first to respond, saying that it would press ahead with its plans to establish a foothold in the EU.

“We therefore remain very keen to see an agreement that puts in place a sensible transition period and a broad and expansive post-Brexit free trade agreement, which includes the financial services sector,” said Lloyd’s Chief Executive Inga Beale.

Her comments echoed those of trade bodies representing the financial services industry.

“This agreement … is a positive and encouraging step,” said Miles Celic, Chief Executive Officer of TheCityUK, the country’s most powerful financial lobby group.

“For the financial and related professional services industry, our critical issues must now be progressed. The sand in the timer is running out.”

John McFarlane, chairman of Barclays, one of Britain’s biggest banks, welcomed the progress but said many questions remained unanswered.

“Good progress on the key political issues and good to see likelihood of a transition period. What ultimately matters for our sector is ”grandfathering“ of existing contracts, and continued market access…” McFarlane told . “We won’t though know this for some time.”

Banks in London are also preparing to move hundreds of thousands of contracts they expect to be rendered invalid by Brexit to continental Europe, in a process known as “repapering”, marking a major step in their adjustment plans and one that they would like to prolong.

There were other signs that the industry was continuing to prepare itself for significant changes.

Liberty Specialty Markets, part of U.S. insurer Liberty Mutual, which had revenues of $38 billion last year, and is one of the largest U.S. property and casualty insurers, said it was switching the domicile of its insurance company to Luxembourg from London.

It announced its plans for a Luxembourg hub in July.

“We’ve been pushing the idea of Canada plus,” said one senior banker, referring to the prospect of a future trade deal between the European Union and Britain that would be an expanded version of one between the bloc and Canada.

“We’ve been told it’s Canada dry for the financial services industry.”