An Italian lobbyist has claimed Milan is the only European financial hub willing to compliment rather than compete with London post-Brexit, saying the perfect solution lies in relocating jobs but keeping bank balance sheets in Britain.
Bepi Pezzulli, chairman of eurosceptic think tank and lobby group Select Milano, told the Press Association that efforts are being made to ensure Milan would be a “junior partner” to the City of London, rather than a setting up as a competitor. “Paris and Frankfurt have a very predatory approach towards the City of London and they want to damage the British economy.
“Instead, we think that the City of London is capable of being a factor of stability for the world economy and European economy as such, so should be protected and preserved,” he said. “So we’re trying to find ways to ensure that we can offer the City of London a platform in the eurozone to mitigate any disruption resulting from Brexit.”
While concerns surround the future location of the lucrative euro clearing industry, Mr Pezzulli said there were opportunities to book euro clearing out of Milan while outsourcing the operations back to London, which has been a long-standing hub for the industry.
“So we’ll have tax revenues in Italy but still the euro clearing market is pretty much located in London,” Mr Pezzulli said. He also played down concerns over Italy’s regulatory environment, admitting it “needs to improve” but was “robust enough”.
“We’re playing a different game. We don’t want to attract balance sheets,” Mr Pezzulli said.
“And so far it has worked out quite well because JP Morgan has relocated bankers to Milan, Merrill Lynch, the same, Goldman Sachs, the same, Deutsche Bank the same, Citi the same,” he added.
Select Milano is aiming to lure 11,000 financial services jobs, but Mr Pezzulli said it hardly resembled a Brexit exodus of bankers. “That’s all we need. We don’t have a plan for world domination. We just have a plan, a realistic, credible plan for the reshaping of the Milan financial services sector and then we’ll take it from there”
Its competitive advantage lies with a raft of recent reforms which include a flat tax for ultra high net worth individuals, income tax breaks of up to 50% for executives and professionals relocating into Italy, and opportunities to bypass a “slow and somewhat inefficient” judiciary by settling financial disputes through arbitration rather than the courts, with an option to use English law, Mr Pezzulli said.
“So this mission here is to basically anglicise Milan, if you wish, and make Milan the junior partner of the City of London.” Milan appears be making a belated bid for Brexit jobs – with the likes of Dublin, Paris and Frankfurt making headlines over the last year and a half for drawing major banks to their respective financial centres.
But Mr Pezzulli claimed the perceived delay amounted to a “different approach”, avoiding the “fanfare” made by Frankfurt and Paris. “Most of the local desks of the largest US investment banks have been beefed up,” he said, though few will admit to Brexit being the catalyst.
“According to the official narrative, none were Brexit related and nothing that investments banks do is ever Brexit related. The point is that they didn’t happen before.” International financial services firms are widely expected to start pulling the trigger on Brexit contingency plans by the end of the first quarter, when the UK will be about 12 months away from March 2019 when Britain is set to leave the EU.
However, talk of there only being weeks until job and operations moves start taking place is just political, Mr Pezzulli claims, saying that relocations will take place more rapidly over the four months leading up to the exit date.
If correct, it would leave more time for Italians to woo the like of asset management and fintech firms to Milan – having been forced to cancel an Italian delegation set for early February ahead of snap elections.
The pace of job moves, though, has been “perfect” according to Select Milano, which wants to avoid any potential “bottleneck” of firms.
“We don’t need to be aggressive, we are credible, we offer substance,” Mr Pezzulli said.