Goldman Sachs plans to move up to $60 billion in assets from the U.K. to its German subsidiary by 2021 as global banks scramble to anchor themselves to a new European financial hub ahead of Brexit, Bloomberg reported.
The New York-based investment bank is planning to shift the funds to Frankfurt, the headquarters location of Deutsche Bank, Commerzbank and numerous other German financial firms, Bloomberg reported Friday, citing unnamed sources.
Goldman’s Frankfurt-based subsidiary had just EUR 3.4 billion ($4.0 billion) in assets at the end of last year, according to its 2019 annual report. With Goldman now reportedly planning between $40 and $60 billion in transfers to Germany, the subsidiary’s balance sheet is expected to grow considerably.
A Goldman Sachs representative declined to comment on the alleged asset transfers, but spokesperson Sebastian Howell confirmed earlier reports that the bank planned to shift employees from the U.K. to the European Union.
“We are in the process or relocating around 100 employees from London to our offices on the European continent,” Howell said.
The news of Goldman’s shift toward Europe comes less than two months before the U.K. will formally exit the European Union’s free trade pact, with the chances of Prime Minister Boris Johnson negotiating a deal before Jan. 1 appearing increasingly unlikely.
Financial companies with London hubs are set to lose passporting rights, greatly restricting the ability for firms to do business in Europe without a subsidiary incorporated in the EU.
Goldman is not the only Wall Street bank to shift its European focus from London to the continent as the U.K.’s exit approaches.
JPMorgan Chase is reportedly expected to move EUR 200 billion ($233 billion) from the U.K. to Germany, making it the sixth-largest German bank by assets. The bank also reportedly plans to move 200 bankers from London to cities like Frankfurt, Paris and Madrid.
Germany’s central bank expects a total of EUR 675 billion ($802 billion) in capital to flow into the country this year related to Brexit, creating about 2,500 banking jobs. The Bank of France anticipates EUR 150 billion ($178 billion) in transfers. Ireland, Spain and Luxembourg are also expected to benefit.
In all, Brexit is expected to lead financial services firms to transfer 7,500 jobs and GBP 1.2 trillion ($1.6 trillion) out of the U.K., according to October estimates from accountancy firm Ernst & Young.
Within the U.K., more than 36% of financial firms were planning job cuts in the near future, according to a Lloyds Bank survey from September. That survey was conducted before Brexit negotiations deteriorated and the coronavirus pandemic surged across Europe again, meaning U.K. bankers could be in for an even bleaker-than-expected winter.
--Additional reporting by Covey Son