Morgan Stanley plans to shift $120bn of assets to its Frankfurt-based subsidiary before the end of March.
The US bank needs to strengthen its assets held within the European Union so that it can continue to serve clients in the 27-nation trading bloc once the UK’s post-Brexit transition period comes to an end on December 31.
The bank expects to move most of the assets to Morgan Stanley Europe SE in the first three months of 2021, a person familiar with the matter said. A spokesperson for Morgan Stanley declined to comment.
Banks, and other financial firms, will be unable to provide some services to EU-based clients from London because the European Commission has not recognised the UK as having equivalent regulations to its own. In equities, for example, continental European investors will have to place their trades with banks based inside the EU. That forces the banks to hold more assets at their EU-based subsidiaries to back those trades.
Goldman Sachs and JPMorgan are also shifting assets out of London in preparation for the end of the transition period. A person familiar with the matter said Goldman would move as much as $60bn to Goldman Sachs Europe SE before the end of 2020, while JPMorgan began the transfer of $230bn to Germany’s financial centre back in September.
Bloomberg News first reported Morgan Stanley’s plan to shift the assets. The US bank set up a pan-European equity-trading venue in Paris in 2018, making it the first operator of such a venue to bypass London entirely. All the other companies operating equity-trading venues started with a market in the UK capital; most of them have now also set up duplicate venues inside the EU.