Financial service companies could leave the UK if a Brexit becomes a reality, a parliamentary committee has been told.
Representatives from HSBC and Barclays appeared before the Treasury select committee yesterday (6 January) and were quizzed about the positives and negatives of Britain’s position in the European Union.
Mark Astaire, vice chairman of Barclay’s investment banking division, said: “There is a lot less sunk cost in financial services in terms of remaining in the UK than if you put up a car plant.
“I don’t think London will collapse whatever happens, far from it. I think there are lots of other good reasons why London will be successful [if Britain leaves the EU] but there is a clear risk at the margin that people will just get up and go, whereas you cannot move your car plant from Sunderland.
“Within the industry itself if you are one guy who is the wizard at your hedge fund and you have got 10 people who work for you, you can be quite a substantial business but it is pretty easy to move anywhere.”
James Chew, group head of regulatory policy at HSBC, said the on-going question of his company’s domicile would not be resolved by the result of the referendum.
He said: “The domicile debate is a totally separate one from the EU.”
The company ruffled feathers last year when it announced a review of whether it would remain domiciled in the UK.
Committee member Chris Philp asked whether the introduction of the bonus cap - fought by the UK government - was a demonstration of the negative impacts of EU membership.
But Mr Chew said: “There was political sentiment in Europe which said we have got to do something.
“I think you do have to look at it in the round and maybe that [the bonus cap] is something where you see that it didn’t go too well .There are a lot of other things that are benefits.
“The UK has enormous influence at the top of the tree on the FSB and the Basel committee.”
Mr Astaire said: “There was a political desire to be seen to do something about bonuses and that is in a way understandable.
“If you are trying to employ people in the US as a European bank that is a disadvantage relative to American banks.”
He added: “London has continued to thrive within the EU and I think there is a generally held view that we fight our corner pretty well within Brussels.”
The cap restricts bonuses to 100 per cent of banker’s pay or 200 per cent with shareholder approval.
Both Mr Chew and Mr Astaire said the prospect of leaving the EU would mean their companies would incur large costs adapting to the new environment.