Concerns regarding the so-called Brexit have adversely affected investor sentiments since the possibility of Britain abandoning the European Union became bright. Market uncertainty followed worries from the macro environment which led to a change in the guidance and future stance of corporations. In the event of a Brexit, Morgan Stanley (NYSE: MS) is reportedly planning to relocate approximately 1,000 employees.
According to sources familiar with the matter, the multinational bank might move its employees from the United Kingdom. A report in the Sunday Times stated that Morgan Stanley will move the staff from Britain to other areas of Europe. Other banks in the United States have also issued similar warnings. Citigroup, Goldman Sachs, and JP Morgan Chase suggested the amount of relocations that would be conducted if Britain leaves the European Union.
Morgan Stanley, among other large capitalization banks, has obtained significant attention since the beginning of 2016. The US bank’s stock plunged as this year did not turn out to be favorable for the broader markets. However, Morgan Stanley recovered during the second quarter as it regained momentum. The increasing worries from the macro environment and the concerns regarding a possible recession led to a decline during the first quarter of the current fiscal year. The US bank took a blow from the great increase in volatility and muted client activity levels. It is safe to assume that Morgan Stanley has been on a roller coaster rise since the beginning of the present year.
Meanwhile, as markets regained momentum, the stock of the multinational bank has stabilized. Yet, it is important to take note that there are increasing obstacles ahead that might hamper growth. With downbeat jobs data that implies labor market weakness, markets are now anticipating the Federal Reserve to stand pat in the meeting this month. With grim prospects of an interest rate hike and the EU referendum approaching, the US bank’s stock has been under pressure.
Among other firms, European banks have gained attention and have already began to emphasize the possible threats of Britain exiting from the EU. Deutsche Bank restated that the Brexit would cause business to “gravitate back to euro zone naturally.”
Earlier in 2016, HSBC revealed that the bank might need to relocate approximately 1,000 employees across to Paris. The global banking and market division employees will be required to be relocated if Brexit goes through. HSBC also confirmed during the previous month that the company would move 840 IT employees to China, Poland, and India from the UK.
According to HSBC UK COO Mr. John Hackett, “We have stated that we are targeting significant cost reductions by the end of 2017…as part of a global relocation exercise, around 840 non-customer-facing IT roles will transfer from the UK to other sites around the world by the end of March 2017…UK will continue to play an important role in HSBC’s global IT infrastructure, employing several thousand IT professionals.”
It will be interesting to witness how the results of the referendum will turn out and how these financial service companies will respond to the regulatory situation and interest rate environment in the United Kingdom.