Luxembourg, Paris, Frankfurt, Dublin, Malta … all fund jurisdictions hoping to benefit from the UK’s vote to leave the EU. But while industry insiders in these countries may be rubbing their hands with glee, some think the UK may actually be in a stronger position post-Brexit, despite potentially losing access to the European market.

A vote for Brexit triggered huge uncertainty in the City as people feared for their jobs and financial institutions talked of moving away from London. M&G was one such player as it announced plans to build a Dublin funds business on the back of fears that the UK’s non-EU status could impact investor sentiment. Rathbones also said it may have to “put boots on the ground” in Luxembourg or Ireland.

Aberdeen Asset Management, HSBC and JP Morgan also expressed a desire to move to Luxembourg in the event of a Leave result. In the investment banking arena, employees at one of the large players are being offered attractive financial packages to relocate from London to Spain.

And the fear among investors is palpable. In June, the UK retail funds industry saw a staggering outflow of £3.5bn. This is almost six times the £581m pulled from the market at the height of the financial crisis in January 2008.

In light of this, the proverbial vultures are circling as Paris sees the opportunity to relive its glory days as a banking hub and the smaller jurisdictions grasp for growth on the back of this once in a lifetime event.

Reportedly, both Dublin and Luxembourg are busy trying to lure business away from London.

Luxembourg is said to have set up a working group focused on attracting UK asset managers to the country while Dublin’s trade body has set its 38 working groups the task of finding out how it can benefit from the referendum result. Malta’s funds industry is also surveying the situation to understand how best to position itself in the wake of the expected post-Brexit changes.

But all is not lost for London. Managers who already have Ucits funds registered in a European hub will probably need to make fewer changes. According to Sean Tuffy, head of regulatory intelligence at Brown Brothers Harriman in Dublin, the UK vote to leave the European Union is not an immediate threat to UK asset managers with Irish and Luxembourg Ucits funds as the passport allows funds authorised in one EU member state to be sold freely across the trade bloc.

Neil Woodford, one of the UK’s most renowned fund managers has been very vocal in his stance that Brexit is not a catastrophe for the industry or the country. In his initial post-Brexit thoughts, Woodford said: “Markets are clearly shocked by the decision but, in our view, it is not as negative a development as the market’s initial reaction appears to imply.”

The positive view on Brexit is not only emanating from locally based individuals. Ironically, a positive spin on Brexit is offered by the Luxembourg Finance Minister. In a recent interview with the Wall Street Journal, Pierre Gramegna said the UK will enjoy more freedom when it comes to setting financial rules which could make up for the potentially reduced access to EU markets.

“It is very difficult to anticipate whether it will become more successful by not being inside the European Union,” he said, “But I would not exclude it. We Europeans, the other 27 [members of the EU], should not underestimate the United Kingdom. There are uncertainties but the end result could still be good.”


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