Deutsche Bank has moved a large part of its euro clearing activity to Frankfurt from London in the latest sign of rival European cities seeking to divert business away from the City ahead of Brexit.
Euro clearing is the system through which euro-based financial transactions are settled, and London is known as a leader in the clearing business. Clearing house LCH, owned by the London Stock Exchange, previously dominated the market, processing almost £900bn in deals per day.
The shift, first reported by the Financial Times, is a victory to Deutsche Boerse’s goal of winning a large part of the euro clearing market from London as Britain leaves the European Union.
“Deutsche Bank has begun to clear large parts of its euro derivatives trading with Eurex Clearing,” a spokesman said.
The bank was quick to emphasise that no jobs have been moved out of the City. Stefan Hoops, the bank’s global co-head of institutional and treasury coverage, told the FT: “It’s the same London-based person who clears a transaction. We’re just using a different clearinghouse.”
Britain’s vote to leave the EU revived calls to move euro clearing out of London but until now there had been little real sign that lenders and clearing houses are moving operations away from the UK.
The group said in 2017 that it was committed to the UK, as it signed the lease on a new London headquarters, taking on space at new City site 21 Moorfields for 25 years.
However, the lender said earlier this year that it planned to cut more than 7,000 roles in an effort to reduce costs, putting City jobs at risk – the bank employs 8,000 people in London.
This follows a plan from Lloyds to run three separate subsidiaries in continental Europe after Brexit.
The City of London Corporation chief warned that over 12,000 jobs could be lost in the Square Mile because of Brexit, as reported by International Investment.
Hubertus Väth, chief executive of the marketing group Frankfurt Main Finance, told the FT that moving euro clearing from London to Frankfurt was “on top of our priority list from the very first day after the Brexit referendum”.