City banks defy Brussels to out-earn French rivals

·2 min read
city of london banks brexit brussels eu
city of london banks brexit brussels eu

British banks have made more profit than French rivals for the first time since 2015, despite efforts by EU officials to shift more jobs out of London and onto the continent post-Brexit.

UK banks generated $55.1bn (£46bn) in pre-tax profits last year as big lenders benefited from an economic bounce back from Covid, a private equity deal-making boom and a soaring housing market.

British lenders managed to narrowly beat their counterparts in France on profits for the first time since before the EU referendum, according to The Banker’s Top 1000 World Banks ranking. UK banks collectively made more profits than any other European country.

It comes despite efforts by Brussels to push more business out of London post-Brexit. The European Central Bank (ECB) recently ordered eight banks to relocate more traders out of London and into financial hubs within the EU, such as Paris or Frankfurt, amid concerns that companies are out of reach of European regulators.

Britain's lucrative finance industry has been a key battleground ever since the vote to leave the EU in 2016, with rival European cities fighting to lure bankers away from the City of London.

France has made a particular effort to win over foreign business since the Brexit vote, setting out plans to offer language lessons to London-based bankers and their families in 2018. Emmanuel Macron has also tried to win over bankers at his annual "Choose France" events at the Palace of Versailles.

JP Morgan, Goldman Sachs, Morgan Stanley and Bank of America have all ramped up their presence in Paris in recent years, while the European Banking Authority moved from London to Paris in 2019.

However, not everyone has proved willing to move. Sources told Bloomberg last year that when JP Morgan tried to move 15 London traders to Paris, about half resigned. Consultants at EY estimate that only around 7,000 roles have moved out of Britain since 2016, much smaller than the 200,000 job losses predicted before the referendum.

The ECB has been assessing where staff sit and book trades at the EU arms of big banks, as well as who is in these hubs, amid fears that risks relating to EU clients could slip from its oversight. It has been trying to crack down on a practice known as “back-to-back” trading, where banks serve EU clients while keeping senior staff and capital in the UK.

Britain’s banking sector recorded the fourth highest profit total globally last year, trailing China, the US and Canada.

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