In a note sent out to customers, Citigroup (C - Free Report) has announced plans to establish a new British headquarter in London for its consumer operations on account of Brexit. Though the company awaits necessary regulatory approvals, the transfer is expected to be completed by March 2019. The news was reported by Reuters.
The business previously was carried out by Ireland-based Citibank Europe plc. As a result of transfer, all British consumer accounts, services and investments would be shifted to the new entity.
"The creation of Citibank UK Limited will enable us to continue to service our Citigold and other UK consumer clients in the full range of post-Brexit legal and regulatory scenarios," a Citi spokeswoman said in a statement.
Moreover, in a recent development in the Brexit deal, the European Central Bank has asked banks to limit dependence on the use of a “back-to-back” booking model by 2022, as reported by the Financial Times. Through this model, banks were allowedto process trade andloansin the European Unionwhose risks were managed and capital washeld in London.
Banks are likely to be impacted by this new development as otherwise they would have been able to keep staff and capital in London.
Citigroup is not the only bank preparing for the impact of Britain’s exit from EU, which is due in March 2019. Goldman Sachs (GS - Free Report) has taken up a new office space in Frankfurt with plans to shift about 500 jobs. Also, JPMorgan & Chase (JPM - Free Report) expects to relocate at least 4,000 jobs to EU. However, the final count would depend on the ultimate deal. Further, Bank of America (BAC - Free Report) has said it might move nearly 1,000 jobs to the French capital.
Shares of Citigroup have gained 4.3% over the past six months, outperforming the industry’s rally of 1.4%.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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