The chairman of Royal Bank of Scotland has warned that banks could pull operations out of Britain unless Theresa May draws up transitional arrangements for the country’s exit from the EU.
Sir Howard Davies said it would be damaging if there was no transitional plan and that banks would have to make decisions based on uncertainty.
Speaking to ITV’s Peston On Sunday programme, he said the US and Japanese banks were concerned by the prospect of a hard Brexit and were drawing up contingency plans.
“I think it is damaging if we don’t get a transitional deal because I think you will then see banks and financial institutions making decisions on the basis of uncertainty.
“They will not wait because they have to make a decision which will allow them to be, to continue to function in the event of a hard Brexit if that’s a possibility.
“So they will not sit back, they are currently making contingency plans and once you’ve got a contingency plan – hey, there is a risk you might implement it one day.”
Davis said the government did not need to reveal its full negotiating position, but needed to reassure the City so Britain did not encounter a “jerky and sudden” departure from the EU.
His comments come as a group of financiers and lawyers based in Milan draw up proposals for a post-Brexit financial services centre for Europe hinged around London and the Italian city.
The aim of Select Milano, an independent organisation endorsed by the Italian government, is not to steal business from London but to help financial services thrive in Europe after the UK leaves the EU.
Its chief executive, Bepi Pezzulli, said one idea that was being drawn up was Dublin as satellite because the Irish legal system was closest to the principles of English law that financiers were accustomed to.
“I don’t think destroying or fragmenting the City of London is a good way forward,” said Pezzulli. “Destroying a cluster is not good. We should instead enlarge the cluster and make London and Milan the head of a new cluster.”
