(Bloomberg) -- Deutsche Bank AG is slowing down its Brexit preparations, according to a person familiar with the decision and an internal memo seen by Bloomberg.
While Deutsche Bank still plans to make Frankfurt its global booking hub by year’s end, not all clients booked in London will be moved across to Germany before the start of the new year, according to a memo signed by Rob Casebourne, and the person familiar. Garth Ritchie, the firm’s head of investment banking who also serves as the bank’s U.K. chief, last year appointed Casebourne to oversee the bank’s Brexit preparations in the U.K., according to another person with knowledge of the matter.
According to the memo, Deutsche Bank has decided to use “the extra time provided by the transition period to extend the implementation for client migration. We will be repapering a number of clients in 2018, with the remainder to be repapered in 2019.” Deutsche Bank declined to comment on the memo.
A preliminary agreement struck by the U.K. and EU in March, which has no legal force and may yet be derailed, outlines the nature of a transitional period after the day in March 2019 when the U.K. is set to leave the EU. During the transitional period, banks operating in the U.K. would still effectively have full rights to service EU-based clients.
The latest move is consistent with other signs from Deutsche Bank that the disruption to its business from Brexit may not be as extreme as first thought. Former Chief Executive Officer John Cryan said early this year that the jobs relocated as a result of Brexit would only be in the hundreds, rather than the expected thousands.
Other prominent bankers have warned that they will still have to press ahead with relocations this year, in the absence of more certainty on the arrangements post-March 2019. Goldman Sachs Group Inc. CEO Lloyd Blankfein told Politico in an interview this month that banks couldn’t wait until the last minute to do things such as renting office space, or applying for operating licenses from local regulators.
While the Bank of England has told banks operating in London that they could reasonably expect to carry on operating normally during the implementation period, the European Central Bank has instructed Eurozone banks to prepare for more disruptive outcomes. EU attitudes appear to have hardened even further in recent days.
“No one should underestimate the risk of disagreement,” the bloc’s chief Brexit negotiator Michel Barnier said in a speech Thursday. He said that markets should “hope for the best, but prepare for the worst.”
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