Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
The City hits “crunch time” for Brexit transition
Prime Minister Theresa May received a warning yesterday from a City lobby group which claimed that it is “crunch time” for a Brexit deal for UK finance firms.
On Thursday, the day before May is set to deliver a Brexit speech to EU leaders in Florence, lobby group TheCityUK issued a stark warning on the lack of a transitional deal for the financial services industry, which has already led to a number of firms moving their operations out of the UK. “When they’ve gone, it’s hard to see them coming back”, says Miles Celic, CEO of TheCityUK.
“We need the UK and the EU27 to agree a time-limited and legally-binding transition period that resembles the status quo as closely as possible.”
It is expected that decisions of where to be headquartered will be made by financial institutions by the end of year, which makes it crucial that a transitional deal, allowing firms to continue to operate within EU jurisdictions from the UK, is struck by this point at the latest. However various major banks, insurers and fund managers have already kicked off in implementing contingency plans. This week, Lloyds of London owners XL Group announced it will be shifting its headquarters to Dublin in 2018 pending regulatory approval, whilst Royal Bank of Scotland, Bank of America, Barclays and Morgan Stanley have all selected their new European bases.
One subsector within the FS industry to have notably kickstarted the outflow from London is foreign exchange traders. Earlier this month we took a look into why global traders have started to shift their bases over to Amsterdam in particular, which you can read here.
Meanwhile, the industry is also awaiting a vital report from the International Regulatory Strategy Group (IRSG) which will lay out the most ideal trade pact to come out of Brexit negotiations that mutually benefits both UK and EU firms. The paper is due to be published in Brussels next Tuesday.
Without transitional arrangements being made, and given the possibility of faltering Brexit talks, businesses will have no other option but to prepare for a hard Brexit, an action which would impose an irreversible hit to the UK’s financial hub.
In today’s speech, the PM is expected to offer to continue UK funding to the EU budget until the end of 2020, over a year after Britain completes its exit in March 2019. In return, she requests a time-limited transition period, to preserve access to the single market until 2021.
Movers & Shakers of the week
Richard Masters has been named the next chairman of Scotland and Northern Ireland for Pinsent Masons
Virgin Enterprises has appointed IP lawyer Bill Budd as its new head of legal and IP, following the departure of Charlie Everitt to Reckitt Benckiser
James Liddard has left his position as chief legal officer of The Innovation Group to join Colt Group
Herbert Smith Freehills has hired three projects partners from Pinsent Masons to boost its Asia practice. Hew Kian Heong, Ellen Zhang and Michelle Li will sit in the firms Mainland China team.
CMS Bureau Francis Lefebvre has taken on Herbert Smith Freehills’ Paris real estate team, including practice head Pierre Popesco and partner Florence Cherel. Real estate partner David Lacaze will remain at HSF and take on the role of head of real estate at the firm.
Real estate partners Mike Edge and Rachel Pitman have joined Mills & Reeve in Manchester from Pinsent Masons.
Finance partner Simeon Rudin is joining Latham & Watkins’ London office from magic circle firm Freshfields Bruckhaus Deringer