Just take a look at the rise in top incomes at JPMorgan Chase & Co.'s European unit to understand how Brexit has changed banking.

Just take a look at the rise in top incomes at JPMorgan Chase & Co.'s European unit to understand how Brexit has changed banking.

Nobody at the bank's Frankfurt-based division earned more than €1 million ($1.09 million) in 2015, the year before Britain chose to leave the European Union. There were nine by 2019 and 85 by 2021, the most current year for which data are available. Over €3.5 million was made by Seven.

High earners at JPMorgan's main London office increased by just 4% to 312 during the same six years.

Three years have passed since Brexit, and although predictions of tens of thousands of job losses in London turned out to be unfounded, the financial sector has undergone a considerable realignment. The likes of Morgan Stanley, JPMorgan, and Goldman Sachs Group Inc. have expanded their EU businesses.

As a result, highly compensated positions had to be relocated or created inside the bloc. According to a study released in January by the European Banking Authority, the number of bankers and dealers in the EU earning more than €1 million increased by 42% in 2021 from the previous year. The most recent figure, at 1,957, is the biggest on record and occurred as investment banks transferred workers to the bloc and securities businesses saw record income.

"This is only the start. Financial services, of course, are included in the services that the EU and UK's treaty offered nothing for”, according to Xavier Rolet, the former CEO of the London Stock Exchange Group. "The globe is fracturing, but much of it is self-inflicted and related to Brexit,"

Based on regulatory records, the Goldman Sachs business formed in 2018 in reaction to Brexit has been rapidly expanding its workforce. At Goldman Sachs Bank Europe SE, personnel increased approximately seven-fold to 908 in the five years leading up to 2021. The company hired more than 350 new employees in 2021 alone. Although it has one branch in London and ten more around the EU, it is headquartered in Frankfurt.

Furthermore, according to those acquainted with the intentions, JPMorgan has begun hiring in Berlin in preparation for the opening of its second foreign consumer outpost after the UK, which will be a digital bank. The lender plans to locate its EU consumer operations in Berlin, replacing London, which would have served in that capacity prior to Brexit.

Canice Hogan, CEO of executive search agency Shadowhound, claims that both the relocation of responsibilities from London and the development of jobs in the EU are to blame for the larger change.

The influence of continental regulations is one of the causes. Anything involving a euro swap or senior coverage of the area is no longer being done out of London, as said by Hogan, who added that broker-dealers are under considerable pressure from the European Central Bank to relocate their government bond trading teams into Europe.

Brexit resulted in Morgan Stanley adding more employees in the UK and the EU. Over a three-year period until 2021, the bank's workforce in Ireland roughly quadrupled to 20 people. Employment in Britain increased by 5% to roughly 6,000 during the same time period.

Brexit Impact on Equities

With Brexit, London's dominance over the stock market has ended. After Brexit sent a large portion of the city's volume to the Continent, Amsterdam displaced The City as the bloc's leading stock exchange. According to data from Cboe Europe, shares were traded on London platforms for an average of €8.1 billion per day in December, as opposed to €9.2 billion on Dutch trading floors.

That is a significant turnabout from only two years ago. London topped the list in December 2020 with €14.3 billion, more than €10 billion more than Frankfurt, its nearest competitor.

After a transition period ended on December 31, 2020, the EU no longer allowed investors inside its borders to trade shares of businesses like Airbus SE and BNP Paribas SA from the UK. Britain also lost its rights to enter the single market.

London’s Charm

Banks on Wall Street are still hopeful about London. 319 employees at Goldman Sachs in the City made $1 million or more in 2021. Twenty of the highest-paid individuals made between €11 and €12 million.

The City continues to be important to international finance. According to figures released in January by TheCityUK, the UK has an £81 billion ($100 billion) trade surplus in financial and associated professional services. There are about twice as many transactions in dollars as in the US, meaning, the country continues to be the greatest net exporter of financial services worldwide.

(Bloomberg.com, Bbcnews.co.uk, TheCityUK.co.uk)