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RBS braces for no-deal Brexit by shifting £13bn to Netherlands

The Guardian logo The Guardian 06/12/2018 Kalyeena Makortoff Banking correspondent

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a tall building in a city: Banks including RBS and Barclays are ramping up their Brexit contingency plans, including bringing in extra staff. © REUTERS Banks including RBS and Barclays are ramping up their Brexit contingency plans, including bringing in extra staff. Royal Bank of Scotland has ramped up its Brexit contingency plans, and is preparing to move a third of its investment bank clients and billions worth of assets out of the UK to Amsterdam.

Trading teams across Barclays, NatWest Markets and JP Morgan are also preparing by extending working hours and bringing in extra staff to deal with major market moves after parliament votes on Theresa May’s Brexit withdrawal deal next Tuesday.

RBS Group has lodged an application at Scotland’s supreme civil court to transfer European clients of its NatWest Market business to its Dutch subsidiary.

It would allow RBS to shift around 30% of the investment bank’s customers out of the UK – about 20% of its revenues – to safeguard its business against a no-deal Brexit. The bank confirmed it will also shift around £6bn worth of client assets and £7bn in liabilities from its UK business to its new EU hub.

HONG KONG, CHINA - 2018/12/02: Multinational banking and financial services company The Royal Bank of Scotland RBS logo is seen on an Android mobile device with a figure of hacker in the background. (Photo by Miguel Candela/SOPA Images/LightRocket via Getty Images) © 2018 SOPA Images HONG KONG, CHINA - 2018/12/02: Multinational banking and financial services company The Royal Bank of Scotland RBS logo is seen on an Android mobile device with a figure of hacker in the background. (Photo by Miguel Candela/SOPA Images/LightRocket via Getty Images) If the UK strikes a transition deal, the customer migration “may be more gradual and subject to further political developments”, RBS said.

While Amsterdam is set to serve as the bank’s EU hub, RBS will also service clients out of Dublin, Frankfurt, Madrid, Milan, Paris and Stockholm.

RBS would not confirm how many investment bank clients it currently serves.

a group of people sitting at a table using a laptop: Traders from BGC, a global brokerage company in London’s Canary Wharf, react as European stock markets open on 24 June 24 2016 after Britain voted to leave the EU. Photograph: Russell Boyce/Reuters © Reuters Traders from BGC, a global brokerage company in London’s Canary Wharf, react as European stock markets open on 24 June 24 2016 after Britain voted to leave the EU. Photograph: Russell Boyce/Reuters The customer migration means NatWest Markets can continue to serve European customers even if the UK crashes out of the EU without a trade deal that covers financial services. That scenario would leave banks without a replacement for EU passporting rights, which allow firms to do cross-border business throughout the bloc.

The court hearing to approve RBS’ client transfer plan is set for 22 February 2019.

It comes as investment banks prepare for market volatility surrounding the contentious vote over May’s Brexit withdrawal deal next week.

Barclays is bringing in extra staff to its New York, London and Singapore offices to help investment banking clients manage their exposure to UK markets.

Its foreign exchange staff will be working extended hours, while analysts and economists will follow market developments through the night on 11 December.


“Our primary focus remains on helping our clients navigate through any ensuing market volatility once the results of the vote are announced,” said Filippo Zorzoli, Barclays’ head of macro distribution for Europe, Middle East, Africa and Asia Pacific.

Barclays has been hosting regular client calls around the Brexit withdrawal deal vote that have attracted up to 800 people at a time.

LONDON, ENGLAND - OCTOBER 08: A commuter walks past a branch of RBS bank, a decade after the British Government paid billions of pounds to support the UK banking sector during the 2008 financial crash, on October 08, 2018 in London, England. The Royal Bank of Scotland is still 62% owned by the British taxpayer, down from 70% in 2008, after a £20billion payment to prevent the collapse of the lender as the crisis deepened.  (Photo by Leon Neal/Getty Images) © 2018 Getty Images LONDON, ENGLAND - OCTOBER 08: A commuter walks past a branch of RBS bank, a decade after the British Government paid billions of pounds to support the UK banking sector during the 2008 financial crash, on October 08, 2018 in London, England. The Royal Bank of Scotland is still 62% owned by the British taxpayer, down from 70% in 2008, after a £20billion payment to prevent the collapse of the lender as the crisis deepened. (Photo by Leon Neal/Getty Images)

Traders at NatWest Markets are poised to work after UK markets close to deal with any major moves on the pound, which slumped to a 31-year low following the EU referendum in June 2016.

JP Morgan will also have staff working late in London to serve clients.

While next week’s parliamentary vote is not expected to cause as much market turmoil as the EU referendum, it is still unclear whether an MP rebellion could trigger a general election or result in a second referendum.

It could mean further pain for stock markets, which have sunk amid fears of a sharp slowdown in the US economy and a trade war between the US and China. Around £56bn was wiped off the FTSE 100 on Thursday, marking the worst trading session for London’s blue chip index since the Brexit vote.

Video: RBS CEO McEwan doesn't see another Brexit deal (Bloomberg)

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Further uncertainty over Britain’s future could knock the pound and the share price of companies that do most of their business in the UK.

“These are companies which are heavily plugged into the domestic UK economy, like the banks, Lloyds and RBS, the housebuilders Persimmon and Taylor Wimpey, and the retailers M&S and Next,” said Laith Khalaf, a senior analyst at Hargreaves Lansdown.

“The fear is if Brexit goes badly, the UK economy will suffer and the profits these companies can make will be dented, and this concern is then manifested in weaker share prices.”

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