(Reuters) — Britain’s 2.2 million financial industry workers face years of uncertainty and the risk of thousands of job cuts after the country voted to quit the European Union, leaving question marks over London’s status as Europe’s premier financial centre.
The ‘Vote Leave’ campaign fronted by a slew of Conservative lawmakers and financial industry veterans claimed victory over its ‘Britain Stronger in Europe’ rival, after 52 percent of Britons voted to support their plan to leave the 28-nation club.
A morning of triumph and jubilation for the Brexit camp has been overshadowed by an average 13.4 percent fall in the share prices of the top five British banks and slides of 12-14 percent in elite wealth managers Schroders (SDR.L), Aberdeen Asset Management (ADN.L) and St. James’s Place (SJP.L).
The impact also sent ripples across the region and European bank shares tumbled more than 13 percent .SX7P, roughly twice as steep a fall as that seen among big companies, with lenders in Italy and Greece hard hit.
A leave vote means the future of Britain’s financial services industry is now hanging in the balance.
All depends on the divorce between Europe and Britain, the latter’s ability to retain access to the European free market, and cope with the volatility that has seen sterling nosedive against major global currencies.
The mood in the restaurants and coffee shops in the high-rise banking hub of Canary Wharf, home to JPMorgan JPM.L, Citi (C.N), HSBC (HSBA.L) and Barclays (BARC.L), was sober and contemplative, with job security fears rising to levels unseen since the 2008 financial crisis.
Investment banks have already warned they could move thousands of jobs if Britain opts out of the EU, while the European Central Bank has signalled it could force euro trading out of London, the world’s largest foreign exchange market.
But some sought to play down fears of a catastrophic hit to Britain’s banking sector, pointing to extensive contingency planning and many years of experience navigating crisis.
Goldman Sachs (GS.N) Chairman Lloyd Blankfein and Jes Staley, CEO of Barclays (BARC.L) – which suffered the biggest one-day fall in its share price on record on Friday – said their banks had long histories of adapting to change and would work with relevant authorities as the terms of the exit become clear.
HSBC Chairman Douglas Flint said the day marked a new era for Britain and British business, describing work to establish fresh terms of trade with European and global partners “as complex and time consuming”.
Wall Street bank Morgan Stanley (MS.N) said the significance of the decision would not be known for some time.
A person familiar with the matter earlier told Reuters the bank could move around 1,000 of its roughly 6,000 employees currently in Britain to elsewhere in Europe if Britain quit the EU.
Jamie Dimon, CEO of rival JPMorgan, told staffers his bank “may need to make changes to our European legal entity structure and the location of some roles to comply with new laws as we serve our clients around the world”, casting a pall over its 16,000 strong workforce.
However, the City of London Corporation, which oversees the capital’s financial district, said the leave vote should not lead to a major exodus.
“There will be no mass exit of banks and financial institutions from the Square Mile,” Mark Boleat, policy chairman for the City of London Corporation, said in a statement.
“The general view of the City is that the government should push for the UK to retain our access to the single market,” Boleat said.
The British Bankers’ Association Chief Executive Anthony Browne moved to reassure people that banks across the country would be operating as normal on Friday.
“People will be able to take money out of cash machines,” he said.
CARNAGE ON MARKETS
Months of bitter campaigning has left the industry – which earned the nation 190 billion pounds in 2014 – divided, with investment banks and insurers pitted against many fund managers and brokers who wanted a Brexit.
Property investor Richard Tice, a co-founder of Leave.eu, a British Out campaign, and one of the few prominent City figures in favour of leaving, told Reuters he cried tears of happiness after the vote.
“There is huge joy, delight and pride. We have changed the course of history in the UK. It is very simple, everyone needs to calm down and do what we do well which is working and playing hard.”
But there was little of that joy in trading rooms.
Sterling fell to its lowest level since 1985, the year before Britain’s deregulation of financial markets that helped propel the City of London into one of the world’s major financial centres in the so-called ‘Big Bang’.
Photo: A British flag which was washed away by heavy rains the day before lies on the street in London, Britain, June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum. REUTERS/Reinhard Krause