Large banks in Britain have clashed with other parts of the financial sector about who should be leading efforts to lobby the government over Brexit.
Failing to present a united front could be damaging as the industry, Britain’s largest export sector and biggest source of tax revenue, fights to retain access to Europe’s single market.
There is growing speculation that the sector, which includes retail banks, asset managers, insurers and investment banks, will lose rights as the British government negotiates its exit from the European Union.
Ten of the biggest banks based in London told Reuters they are concerned that conflicting industry voices and a burgeoning of lobby groups will dilute government discussions.
“To the extent it looks disjointed, there is a degree of inevitability about that as different bodies want different things,” said Gerald Walker, ING’s UK CEO, and a board member of main industry group TheCityUK.
A separate high-level group of executives, headed by Shriti Vadera, chairman of the British arm of Spain’s Banco Santander, was set up days after the Brexit vote to represent the views of banks, insurers, brokers and asset managers.
But last month it was subsumed into TheCityUK, after protests from trade bodies, investment banks and smaller firms. They felt they would be underrepresented if the government dealt separately with larger banks in the other group, officials said.
“It was a complete dog’s breakfast. There were a lot of egos involved,” said an employee of one international bank involved in the talks. “The groups weren’t connected on content or policy. But it’s now been reined in.”
A spokesman for the Vadera group had no comment. TheCityUK had no immediate comment.
Several other new lobbying groups are being set up.
Squabbles and Irritation
There has also been disagreement between financial firms about which organizations get to meet government ministers and what they should prioritize in talks.
“People squabble when they don’t know what to do,” said one lawyer close to the banks. “Every bank seems to feel they are uniquely entitled to speak for the industry.”
The head of one of Britain’s largest banks told Reuters he was frustrated that Prime Minister Theresa May held a meeting with the heads of U.S. banks in New York, but had not found time so far to collectively meet with British banks.
Similarly, international banks with a large presence in London were irritated that they were not invited to a meeting with the finance minister last month attended mainly by British financial institutions.
They then asked for their own meeting with top civil servants from the Treasury.
“We have made it clear we are not prepared to be intermediated,” said one of the bankers involved in the meeting.
Bankers say they are frustrated that more than three months after the referendum result they still lack a clear idea of what Britain’s divorce from the European Union means.
May provided some clarity on Sunday when she said Britain would trigger the divorce process by the end of March, starting two years of exit negotiations.
Bankers are talking to regulators in other European capitals about moving parts of their business although no firm decisions have been taken yet, executives and lawyers said.
“The government says ‘we will not give a running commentary’ but as banks without more information we can’t plan,” said a senior executive at a top British lender, who has held talks with government ministers.
Banks say the two-year exit time frame is too short.
Call for Coherence
The febrile mood in the City over Brexit rose to the surface last month when Angela Knight, a former government minister who headed the British Bankers’ Association during the financial crisis, called for a coherent voice to help the government in its negotiations with Brussels.
“If the different groups keep on going either to the government or to Europe saying ‘do this’ or ‘do that’, then all that will happen is government and Europe will say, ‘well the Brits don’t know what they want in financial services’ and so you will get what you are given,” said Knight.
Another new lobbying group will be launched this month in an attempt to embrace both those who backed and opposed leaving the EU and to give a voice to smaller, more domestically focused firms whose priorities differ from the big banks.
“It’s right the big banks should have a significant seat at the table. At the other end of the scale there are an awful lot of underrepresented institutions,” said Anthony Belchambers, one of the leading members of the new Financial Services Negotiation Forum.
“We have to bridge that divide and make sure as far as possible the financial services sector speaks with one voice.”
Property investor Richard Tice has started another group backed by prominent City figures, including Hargreaves Lansdown founder Peter Hargreaves, pushing the government for a “hard Brexit,” or a clean break with the EU, the worst outcome for many big American and Japanese banks in particular.
Amongst the differences, the groups all appear to share the view that UK-based firms will not retain the passports that allow them to sell their services across the EU after Brexit.
Banks are now focusing on asking the government to negotiate a transitional period of up to five years between EU departure and the start of new trading terms, once they have been agreed, bankers said.
But lawyers said that such transitional arrangements have never been negotiated before and would raise complex issues, such as whether Britain is legally inside or outside the EU during that period.
Viswas Raghavan, JPMorgan’s head of banking for Europe, the Middle East and Africa, said last week that his bank wants a politically neutral body like the Bank of England or the European Central Bank to come up with a transitional agreement to avoid disruption to markets.
“So whatever is the new norm, we migrate to it in an orderly fashion. If that doesn’t happen and you pull down the shutters you’re going to have pandemonium,” he said.
(Additional reporting by John O’Donnell in Frankfurt and Lawrence White in London; Editing by Rachel Armstrong and Anna Willard)
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