Wells Fargo will not wait for the UK to formally trigger an exit from the European Union before taking steps to ease the impact on its business, according to the US lender's top executive in Europe.
Brexit could reduce income from Wells Fargo’s securities and asset-management businesses as they rely on the UK’s right to sell services freely into the EU, Frank Pizzo, president for Europe, the Middle East and Africa (EMEA), said in an interview at the Sibos financial-services conference in Geneva.
A new subsidiary in a location such as Frankfurt, Paris or Amsterdam is one of the options being considered in case the UK loses those so-called passporting rights, according to Pizzo, who is based in London.
Mitigation options
“We’ve identified potentially the revenue that could be at jeopardy with the loss of passporting and we’re coming up with the options to mitigate that,” Pizzo said. “We’ll be sharing that with senior management of the bank and also our recommendations,” as soon as next month.
Banks and asset managers with European headquarters in the UK face uncertainty after Britain voted in June to leave the EU. The terms for the split haven’t been negotiated and financial firms have been scouting the continent for office space as they prepare to shift jobs abroad. Firms such as insurer Lloyd’s of London and Swiss bank UBS have indicated they may move some operations outside the UK
Wells Fargo, along with JPMorgan Chase, Bank of America and Citigroup are among the US banks poised to make decisions on how to respond to Brexit, according to Pizzo. "Nobody can afford to wait," he said.
Wells Fargo, headquartered in San Francisco, serves corporate and institutional clients in the EMEA region and plans to grow its correspondent banking and real-estate finance businesses in London despite the Brexit vote, according to Pizzo. The company also has a bank in Ireland inside the EU, which would retain its passporting rights regardless of Brexit, and offices in Luxembourg and Milan.
Wells Fargo employs 900 staff in London, and most operations will be consolidated as planned in the building known as 33 Central that the bank agreed to acquire in July in the City of London district, Pizzo said.
In the US, senior management is in a “period of deep reflection” after authorities including the US Consumer Financial Protection Bureau fined the company $185 million (€165 million) this month for allegedly opening about two million deposit and credit-card accounts without authorisation. The fallout is an ongoing problem that senior management wants to resolve, Pizzo said. – (Bloomberg)
