The world’s largest credit ratings agency S&P Global anticipates moving around 30 to 40 of its analysts out of London as a consequence to Brexit, according to the firm’s president and chief executive.
S&P has around 1,500 analysts globally under its wings. However, it needs to meet demands from European Union markets regulator ESMA, which requires rating firms to have “sufficient” numbers of senior staff in the bloc when Britain officially exits the Union next year.
It has sizable offices in Frankfurt, Paris, Madrid, and Milan. It also plans to put up a new office in Dublin which could also be used by staff, according to Douglas L. Peterson, who is S&P’s head, during an interview.
“It won’t be many (staff that have to move),” he stated. “It will be in the tens, maybe 30 to 40.”
He also said that it could involve a small number of sovereign analysts. However, the larger share is potentially in the firm’s structured finance division, which made 10 percent of rating revenues last year.
A company spokesman didn’t immediately specify how many analysts it employs in London.
On the other hand, with its other EU offices in huge European cities, Peterson said that he did not expect to have a hard time convincing his staff to move.
“We have already had some people put their hand up,” he added.
The removal from London will barely put a dent in S&P’s overall presence in Europe’s main financial center. On the flip side, Peterson warned Britain and said that it needed to give some clarity on key post-Brexit regulatory arrangements in order to guarantee there isn’t any more upheaval.
Britain and European Union have signed a deal in principle on a transition period lasting from Brexit Day next March to the end of 2020, but it still awaits ratification.
The Financial Conduct Authority will take over supervision of ratings agencies in Britain. However, ESMA wasn’t able to say whether it will continue to supervise UK-based ratings agencies during this transition period.
Without a bespoke trade agreement after the transition, ratings agencies in Britain would need to have “endorsement” from ESMA to proceed with their service to EU customers. However, the mere size of the agencies like S&P could compel them to base such services to the bloc.
S&P has an EU market share of 46 percent, which is what’s shown on the latest ESMA data. This is well above rival Moody’s on 31 percent.
Meanwhile, US stock futures index jumped on Friday with oil prices increasing ahead of an OPEC meeting and in the lack of any substantial developments in the US-China trade rhetoric overnight.
Oil prices gained more than a percent as OPEC seemed to be closing in on a deal to boost supply to make up for the losses in production at a time of rising global demand.
Dow e-minis gained 104 points, or 0.42 percent. The S&P 500 e-minis perked up 11.5 points, or 0.42 percent, while the tech-heavy Nasdaq 100 e-minis gained 22.25 points, or 0.31 points.