Alex Wilmot-Sitwell, the US bank’s president for Europe, the Middle East and Africa, on September 14 said that a two-year window from the triggering of Article 50 to the point of completing negotiations and implementing the outcome is “simply not long enough”.
Under Article 50, if a withdrawal agreement between a departing EU member state and the bloc over their future relationship is not struck within two years of the clause being triggered, the state’s membership ends automatically unless there is mutual agreement on extending the period.
“The bridge to the ultimate destination is absolutely fundamental, because if that bridge is not long enough, or indeed isn’t even built in time, then it’s impossible to make that journey without incurring huge risks and harm to the participants,” Wilmot-Sitwell said, alluding to the bank’s clients and the wider market.
On the potential upheaval to banks and the wider financial services sector, Wilmot-Sitwell added: “These are very complex processes and migrating huge businesses from one jurisdiction to another jurisdiction requires an enormous amount of work, a huge amount of regulatory approvals, an enormous amount of coordination with other participants – and that process is very dangerous, it’s frought with risk, because the materials that are being moved are risky materials [and] you don’t move nuclear waste in a race.”
He said that his bank had an important role to play in explaining the complex nature of the financial ecosystem so that the “consequences of any steps are understood”.
“It is not a Lego set where little pieces can be pulled up and put somewhere else, the interconnectedness is very significant,” he said.
Also giving evidence to the EU Financial Affairs Sub-Committee were HSBC chairman Douglas Flint and Allianz Global Investors’s vice chair Elizabeth Corley. The evidence session was part of the House of Lords committee’s series of inquiries into the key issues in the Brexit talks that lie ahead.
The consensus among the trio was that the key concern was how the UK will be steered out of the EU, as opposed to how their work is being impacted, with Corley saying that it was already “business as usual” at Allianz GI.
“Following a rather shocked and surprised reaction, which was short-lived, many of our clients are calm, they’re waiting to see what the process, timetable and outcome might be, and so in terms of how we’re looking after their porfolios, and how we are talking to them about services, it’s business as usual,” she said.
Wilmot-Sitwell agreed that “market activity has recovered to levels that would be consistent with a normal market environment” while Flint said that there are “businesses winning” from the comparative advantages of a weaker sterling.