Almost 450 U.K. financial services firms, including 182 investment managers, have relocated to other European cities or beefed up European presence due to the U.K.'s withdrawal from the European Union.
Money managers and insurance firms have also transferred more than £100 billion ($138.3 billion) in assets to Europe as a result of the U.K.'s withdrawal from the European Union.
Analysis by U.K. think tank New Financial found that, as of this month, 440 U.K. financial services firms have relocated to or increased resources in Europe, compared with 269 in a 2019 analysis.
Among the firms moving parts of their business to the EU in 2021 were 126 money managers and wealth managers, up from 95 in 2019; and 60 alternative investment firms, up from 41 in 2019.
Of the firms relocating part of their business to Europe as a result of Brexit, 21 chose to move to Dublin, followed by 19 firms that moved to Luxembourg, 13 firms that moved to Paris, seven firms that moved to Frankfurt and five firms that moved to Amsterdam.
Among alternative investment firms moving to Europe, 10 relocated parts of the business to Luxembourg, nine chose Dublin, five chose Paris, two firms selected Frankfurt and one firm chose Amsterdam.
Firms have also been forced to secure European licenses in order to continue to service European clients from the U.K., amid a lack of agreement on financial services equivalence.
The shift in business, assets and legal entities will gradually chip away at the U.K.'s influence in the banking and finance industry in Europe and around the world, as a greater proportion of business is authorized by and conducted in the EU, New Financial said.
Across all financial services firms, 135 chose to relocate some of their business to Dublin, followed by 102 firms choosing Paris, 93 selecting Luxembourg, 62 opting for Frankfurt and 48 choosing Amsterdam.
Over the longer term, New Financial expects Frankfurt to lead relocation rankings by assets, while Paris will lead by the number of jobs moved. Details on the current rankings and breakdowns were not available.
The firm also identified £900 billion in bank assets, which constitutes around 10% of the entire U.K. banking system, that have been or are being moved out of the U.K. as a result of Brexit as of April. Bank assets that were estimated to have left or that were due to leave the U.K. stood at £800 billion in 2019.
The firm also said there have been 7,400 staff moves or local hires in response to Brexit, which New Financial expects to increase over the next few years.
However, the U.K. is still expected to attract smaller firms to its shores. New Financial expects between 300 and 500 smaller firms to set up a new U.K. office over the next few years.
A copy of the report can be requested on the New Financial website.