Citigroup picks Luxembourg for EU private bank hub – Financial Times

Citigroup’s private bank is setting up a new booking centre in Luxembourg that will allow it to administer the accounts of its EU clients in the event of a “hard Brexit” that involves tariffs or trade barriers.

The US bank, which reports third-quarter earnings later Thursday, confirmed the Luxembourg move in a statement to the Financial Times. It declined to detail the number of jobs to be moved or created.

Citi had said in July that it will base its main EU-broker dealer — which the group uses for its trading and markets business — in Frankfurt.

At that time, Citi’s Europe, Middle East and Africa boss Jim Cowles told staff that other businesses would be scattered across Amsterdam, Paris, Dublin, Luxembourg and Madrid. A total of about 150 jobs would be added across those EU centres, Mr Cowles said.

Citi’s private bank is entirely focused on “ultra high-net worth” clients, who each have total wealth of $25m and at least $10m of that money with Citi. Currently many European clients are handled by staff in London and services provided to them are booked in the UK.

In response to questions from the Financial Times, Citi said on Wednesday night that it had “taken the decision to build a booking centre in Luxembourg for its European resident UHNW clients, in the event of a hard Brexit”.

Citi said its new booking centre “will leverage Citi’s existing legal vehicle and presence in Luxembourg”.

“The decision is based on what is best for our clients and what will allow us to continue to service our clients without any disruption,” the bank added.

“Luxembourg is a known international wealth centre with an established culture of international family offices.”

In the summer, Switzerland’s Julius Baer announced that it would put its new EU base in Luxembourg; it had been considering a regional headquarters in London before the UK’s vote to leave the EU in July 2016.

Banks went into 2017 with blueprints for a variety of Brexit scenarios ranging from the UK retaining access to the single market to a “no deal” exit where the UK leaves without agreeing terms for trade with the EU’s 27 countries.

Top executives say they are increasingly planning for the worst-case scenario, and have given up hope of retaining access to the single market.

On Wednesday, UK Treasury Secretary Philip Hammond said the country has to “be prepared for a ‘no deal’ scenario unless or until we have clear evidence that is not where we will end up”. The UK has set aside a contingency fund to prop up the economy if that happens.

Earlier this week, European Council president Donald Tusk warned that the current pace of negotiations between the EU and UK was unsustainable. “If it turns out that the talks continue at a slow pace, and that ‘sufficient progress’ hasn’t been reached, then — together with our UK friends — we will have to think about where we are heading,” he said.

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