Client-proximity-based spatial clustering of European corporate and investment banking after a hard Brexit

Abstract

If the United Kingdom were to leave the European Union (EU) single market (“hard Brexit”), London-based banks would lose their ability to do direct business with their clients located in the other 30 European Economic Area (EEA) countries. This article addresses the questions of how much corporate and investment banking (CIB) business currently conducted by London-based banks needs to be moved to (non-UK) EEA market hubs and what the resulting spatial clustering of CIB business in Europe will look like. We estimate that between 20 and 30% of the UK-based CIB business will migrate into the remaining EEA locations.