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JPMorgan to Restructure Luxembourg Operation Ahead of Brexit

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With Brexit looming, several global banks have started contingency planning to avoid chaos later on. JPMorgan (JPM - Free Report) is also taking similar actions. The bank has announced restructuring initiatives that will significantly bolster its wealth management operations in Luxembourg.

As part of this effort, JPMorgan intends to merge its London-based subsidiary, J.P. Morgan International Bank Limited (“JPMIB”) with J.P. Morgan Bank Luxembourg S.A. (“JPMBL”). The deal, still subject to regulatory and other approvals, is expected to be completed by early next year.

The merger is expected to substantially enhance capabilities in its Corporate & Investment Bank division’s Treasury Services and Custody & Fund Services units in Luxembourg. Further, this will result in seamless client support for these businesses across the European Economic Area.

Following the closure of the merger, all the assets and liabilities (including client accounts, associated assets and legal agreements) of JPMIB will be transferred to JPMBL, and the former will be dissolved.

Nonetheless, its wealth management operation will continue to have significant presence in London. Further, JPMorgan’s European investment banking and markets businesses will be based in Frankfurt.

Additionally, Mark Garvin, vice chairman of JPMorgan’s corporate and investment banking arm, told the Commons Treasury Committee that up to a quarter of its 16,000 staff in Britain will likely be relocated to the European Economic Area eventually. But this is contingent on the type of deal agreed upon by both sides.
Notably, the initial relocation will be modest, with the shifting of hundreds of staff. Further, he added, “We are now in full execution mode, we are in the very advanced stages of execution in fact... In many cases we’ve passed the point of no return.”

Shares of JPMorgan have rallied 7.1% so far this year, outperforming the industry’s rise of just 0.5%.

Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other than JPMorgan, top executives of Citigroup (C - Free Report) and Barclays also stated that their respective employees have begun moving to other locations across the European Economic Area. Specifically, Citigroup plans to relocate 150 to 200 staff, while Barclays plans to shift nearly 150 employees, with majority going to Dublin.

Moreover, HSBC Holdings (HSBC - Free Report) is on the course to move around 1,000 jobs to France, while Goldman Sachs (GS - Free Report) will likely double its workforce in Frankfurt to 400. Several other global banks and asset managers are also on track to expand their operations in the European Economic Area.

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