It has been an interesting week, to say the least, if you work in the financial services sector.
A week last Thursday, the City of London was confident that the Remain camp was set to triumph in the EU Referendum and that it would be business as usual with our European counterparts.
When City workers woke up on Friday morning, the mood was somewhat more sombre as the markets reacted badly to the news that the Leave campaign had upset the odds and won by a margin of 52% to 48%.
In the days since then, the 24-hour news cycle has continued to move at breakneck speed. British Prime Minister David Cameron has resigned and his expected successor, Boris Johnson, who led the Leave campaign, stunned Westminster by announcing he would not be seeking the nomination.
Meanwhile, the Labour opposition party is set for its own leadership battle after a vote of no confidence in leader Jeremy Corbyn.
Governor of the Bank of England Mark Carney and Chancellor George Osborne have been doing their best to calm the markets amid all the economic and political turmoil with some success.
After a turbulent seven days, the FTSE100 rose above 6,500 points – taking it beyond its pre-Brexit level and to its best reading since last year. The FTSE 250, widely regarded as a better reflection of British economic prospects because of its largely domestic composition, has also been on the rise again although not quite back to pre-Referendum levels.
Mark Carney has been talking a lot about the “resilience of the financial system”, something that will continue to be put to the test in the days and weeks ahead.
During a visit to the City of London this week, the Armstrong Craven financial services team was able to take soundings from some of our clients.
Contacts at one global bank and a leading investment house said they were continuing with a business as usual approach. Both stressed the need for the current political vacuum to resolve itself as swiftly as possible and for the detailed planning process concerning the UK’s “Brexit” to get underway.
Undoubtedly, behind the scenes, the large financial services firms will be mapping out their own contingency plans subject to how deep our exit from the EU goes.
They will need to give consideration to a plethora of talent-related issues, such as where they should be located in a post-EU world and whether there will need to be an escalation in visa and sponsorship applications in order for their people to be able to take up positions within their organisations.
HSBC and Barclays have both given the City a shot in the arm in the last 24 hours.
HSBC Chairman Douglas Flint made it clear that the vote would not bring about a review of the bank’s headquarters.
Meanwhile, Barclays Chairman John McFarlane has also been busy talking up the UK’s financial services prospects.
Mr McFarlane commented: “I do think this will be the time zone’s financial centre and will have a major concentration of European securities traded and European clients dealing here, and that will continue.”
The French bank Société Génerale offered a less clear-cut picture.
The bank’s chief executive, Frederic Oudea, observed that “a new balance must be found between the European financial markets, with a more diverse base.” He went on to talk about the opportunity to “enhance the appeal of the financial market in Paris”.
However, the bank’s UK chief executive Ian Fisher said: “I would like to reconfirm our very strong commitment to the UK, our UK platform and to all our UK stakeholders.”
The financial tectonic plates are shifting. Quite what the new landscape will look like in the future remains uncertain. The City continues to hold its breath.