Morgan Stanley chief executive James Gorman confirms the bank will launch new headquarters in Europe, but that the UK will remain an important part of the firm’s global presence post Brexit.
His comments come as Morgan Stanley reports second quarter earnings are down to $1.6bn compared to $1.8bn a year ago.
Speaking to CNBC, Gorman said: “Clearly we and other banks will have to have a European-style headquarters in one of the major markets, whether it’s Frankfurt or one of the other cities there.”
Luxembourg and Dublin are also set to attract financial services business from London if the UK leaves the single market in its negotiations to exit the European Union.
Gorman says the full impact of the Brexit decision would unfold over five to 10 years.
The bank’s investment management division saw pre-tax income almost halve from $220m to $118m year-on-year.
Following net outflows of $1.7bn the division’s AUM was $407bn at the end of June.
Explaining how the bank responded to Brexit, Gorman said: “It did indeed provide us with a live stress scenario as we endured record high volumes and spikes of volatility, our liquidity remains strong, our systems ran smoothly and our clients access the market quickly and in size.”
London mayor Sadiq Khan yesterday said he was confident the city would remain a part of the single market and that he was meeting with senior government officials this week and next to secure a place at the negotiating table alongside Scotland, Northern Ireland and Wales for Brexit talks.
Remaining part of the single market would require committing to the free movement of people, but Theresa May says she plans to respect the desire of leave voters to take back control of the UK’s borders.
Brexit minister David Davis has said he would prefer a free trade deal similar to Canada’s.