Post-Brexit banking shake-up to benefit UAE financial centres
CEO of lobby group TheCityUK says timezone and Islamic Finance are winning features
While European capitals are battling it out to woo London's bankers post-Brexit, the cities that stand to gain the most could be far further afield, including New York, Hong Kong and Dubai, according to Miles Celic, chief executive of TheCityUK.
The chief executive of the influential financial lobby group told The National that a so-called "hard Brexit" could cost London up to 75,000 jobs, and there is no guarantee that these will end up moving to the likes of Frankfurt, Paris and Dublin.
"A likely destination is New York," Mr Celic said, arguing that many American firms with a large presence in the UK will just repatriate jobs after the country leaves the European Union , rather than look for another hub on the continent. "That's where the first tranche of jobs will go."
The second tranche will go to Asia, he said. "That is more about the economic shift of activity," he explained, citing strong growth rates in Asian economies compared to a relatively stagnant growth profile in the UK and other western nations. There is also a growing middle class which will support future economic expansion.
Brexit has been the "catalyst" for a whole range of business decisions that might otherwise not have been taken for years, according to Mr Celic. The shift of capital to Asia is one such decision.
The Middle East also stands to benefit from the shake-up of financial centres in the wake of Brexit. "It's something we are very conscious of," Mr Celic said.
He argues that the timezone of GCC states will play a major factor in this, as firms are increasingly keen to have 24 hour coverage which supports the argument to open offices in the likes of Dubai or Abu Dhabi.
Financial free trade zones and enterprise areas also make Middle Eastern centres an attractive place to do business, as do new incubator programmes for start-ups, such as the fintech hive which was recently opened in the Dubai International Financial Center and Abu Dhabi Global Market's new Reglab.
Islamic finance is another area of "huge potential growth", Mr Celic said, and hubs in the Middle East are by far the leaders in this area. London is the biggest centre for Islamic finance outside of the Middle East, and it is an area that he says the city is keen to develop further.
The third tranche of London's banking roles will simply be discontinued after Brexit, as they will no longer be required by firms, Mr Celic said.
Meanwhile, the fourth and final batch of jobs are likely to shift to the EU, but even these will be fragmented across lots of centres, rather than concentrated in just one city. "It is not a zero sum game," he argued. "This idea that Paris gains at the expense of London, or Frankfurt... it doesn't stack up."
However, Mr Celic insisted that he is not complacent about the risk posed to London's status as a leading financial hub after Brexit.
"I am not complacent - London has no God-given right to business," he said.
Much will depend on what kind of deal is eventually struck with the EU. TheCityUK has been hosting regular delegations to Brussels, and has presented a list of priorities to the government stating what the financial industry wants to achieve from the Brexit talks.
Mutual market access between the UK and the EU is of utmost importance, Mr Celic said, in order to allow financial firms to continue their cross-border business activity. A transitional period is also critical to avoid a "cliff-edge" once the UK officially leaves the bloc in March 2019. He also stressed the importance of maintaining access to talent and ensuring robust regulation.
In a blue-sky scenario, however, he believes Brexit could be a major opportunity for London's position on the world stage.
"We could have the most comprehensive free trade deal that's ever been done. If we manage to get a free trade agreement that covers goods as well as services, this could be a model for all other future trade agreements."
Updated: October 6, 2017 02:26 PM