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Morgan Stanley CEO James Gorman says the bank may have to move staff to EU after Brexit vote

Gorman said he changed his travel plans to visit London earlier this week

Zlata Rodionova

Thursday 21 July 2016 09:16 BST

'We're not having a knee-jerk reaction here,' Gorman said (Getty Images)

James Gorman, the chief executive officer of Morgan Stanley, said he expects to move some of its staff from London to the continent following UK’s vote to leave the EU.

Gorman said he changed his travel plans to visit London earlier this week, in an interview with CNBC.

Gorman said Britain’s decision to leave the EU bloc means Morgan Stanley will need to set up headquarters on the continent and potentially reshuffle some of its employees.

“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,” Gorman said.

However he sought to reassure his employees: “London is going to remain a critical part of our footprint.”

“We're not having a knee-jerk reaction here. This is going to unfold over at least a five-year” timetable,” he added.

May's Brexit vision

City institutions had warned prior to the vote that leaving the EU could mean job losses and movement of operation to the continent.

Banks fear they may lose passporting rights, which allow firms in one EU country to provide services to clients elsewhere in the single market. Some are discussing whether they will need to move European headquarters to keep the same privileges.

HSBC has confirmed that it will keep its headquarters in London despite the shock decision for the UK to leave the EU.

But Goldman Sachs and UBS hinted they might move some of their staff out of the UK, although no official decision has yet been taken.

Morgan Stanley denied it is moving 2,000 jobs to Dublin and Frankfurt, on the da EU referendum results were announced.

Morgan Stanley’s statement came after sources told the BBC that the process was already underway.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

nito100

6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

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6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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“The UK’s vote to leave the European Union is a very significant decision which will have a considerable impact, the extent of which will not be known for some time,“ a spokesman for Morgan Stanley said.

“There will be at least a period of two years before an actual exit takes place, so there will be time to implement any changes required to adjust our business to the new environment. Morgan Stanley will continue to monitor developments very closely and will adapt accordingly while prioritising the interests of our clients, our shareholders and our employees,” he added.

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