The Fallout from Brexit - The Top Eight Issues for Senior Financial Services Hiring

July 6, 2016

The fallout from the UK’s vote to leave the European Union has raised eight key issues for senior-level hiring in the financial world, says global executive search firm DHR International.

DHR International, one of the world’s largest executive search firms, says that Brexit may result in:

1. Locations in and out of Europe battling it out for the financial services middle and back-office roles that are expected to flow out of London

“Within Europe, Dublin, Warsaw and Lisbon are already jockeying for position to be the main beneficiary of financial services institutions moving their middle and back office roles to save on costs,” says Stéphane Rambosson, Managing Partner and Head of DHR International’s European Financial Services practice. “Cost savings of 30% to 40% are achievable by offshoring these roles, and in uncertain times, that’s enormously attractive.”

May Tung, Managing Partner of DHR International’s Asia Pacific Financial Services practice, adds: “India, Malaysia and China are the most likely locations outside of Europe to benefit from middle and back office growth when international institutions review their global needs.”

2. Top British talent may now be more likely to take roles outside London

Peter Malanik, Managing Partner in DHR International’s Vienna office, says: “For many years, London has been Europe’s unquestioned number one location for top talent, especially in the financial services sector. It has acted as a magnet for the very best and brightest from Europe and beyond.”

“With a lot of senior European roles now expected to move to competing locations like Frankfurt, Paris or even Zurich, the pull of London is likely to weaken, and the most talented individuals will always go where the roles are. I would not be shocked to see a larger proportion of British senior talent being much more open to taking roles elsewhere in Europe.”

 3.  Paris will try to muscle in – but tax and employment law will hamstring it

Gert Stürzebecher, Partner in DHR International’s Frankfurt office, says: “Paris is very keen to build its credentials as a key centre for financial services in Europe, and will be looking to attract senior European banking roles that have previously been based out of London.”

“The main roadblocks to that are going to be the tax rates for high earners, which will turn off a lot of senior individuals in investment banking, and France’s restrictive employment laws, which may discourage institutions from hiring too many people in Paris.”

4. London financial services institutions are going to trigger the restructuring they have been putting off

Says Stéphane Rambosson: “Quite a few of the banks have been putting off the pain of further restructuring for a while in order to bring returns above cost of capital, and Brexit is likely to act as a trigger to get it underway again.”

“Some roles will be offshored and some will be shed entirely, implementing more of the vast restructuring programmes banks have been going through since 2008.”

5. Will the bonus cap be part of the Brexit regulation cull, and will that help London compete?

Says Stéphane Rambosson: “There is likely to be a lot of appetite, both in the financial services sector and in government, for the EU ‘bonus cap’ regulations to be scrapped, and those calls are only likely to increase now the City has to face the competitive disadvantages of Brexit.”

“If that happens, it could be key weapon for London’s banks in attracting and keeping the leading talent in the sector, and fend off challenges from the other European financial services centres.”

6. Amsterdam and Stockholm are looking closely at London’s world-leading fintech industry

Says Peter Malanik: “London is currently Europe’s centre for fintech, but Amsterdam and Stockholm are keen to challenge it. Brexit makes those alternatives much more attractive to the top European fintech talent, who have, up until now, seen London as the place to be in the sector.”

 “Young, talented and high-earning individuals are among the most pro-European groups in London, and they are among the most likely to move elsewhere in Europe for the best opportunity.”

7. Luxembourg and even Zurich might be long-term winners from Brexit

Says Gert Stürzebecher: “For asset managers in particular, Luxembourg is looking very attractive. It’s a hub that offers the stability and certainty that London no longer can.”

“The rest of the Benelux countries, Frankfurt and even Switzerland – Zurich specifically – are also going to see an influx of institutions and roles in the mid and long term.”

8. Expect the unexpected in hiring – is Hong Kong going to benefit?

Says May Tung: “DHR International has won the mandate to find the CEO and related senior management for the new Independent Insurance Authority in Hong Kong.  Post Brexit, we anticipate these roles would generate considerable interest from the London financial services talent pool, particularly from professionals with the strategic mindset to enhance their career experience with more diversity.”