Morgan Stanley is set to bolster its syndicate team in Frankfurt, as part of the US bank’s efforts to comply with new post-Brexit rules for UK-based finance firms.
The bank has hired Sebastian Mentzen, a vice-president in BNP Paribas’ equity capital markets unit in London, to market, price and allocate stocks of companies within the European Union, according to people with knowledge of the plans.
Mentzen, who previously interned at Morgan Stanley in 2009 and has worked in BNP Paribas’ London office since 2018, will join Morgan Stanley in Frankfurt, a person familiar with the matter said.
“When you price a transaction, discussion around the location of that activity is now important,” one person said of the hire.
Morgan Stanley had planned to add up to 50 bankers in the German city as part of its Brexit moves, Financial News reported in 2018, as large investment banks moved to shift dealmakers to the continent to get closer to clients in the wake of the UK’s departure from the EU. FN reported in December that the US banking giant plans to shift $120bn of assets to its Frankfurt-based subsidiary before the end of March. As many as 7,000 jobs in financial services have been lost since the UK left the European Union.
Morgan Stanley’s latest hire comes as the finance services sector are bracing for a years-long wait for a meaningful UK-EU agreement on financial services.
The UK-EU trade deal – announced on 24 December and ratified by the UK Parliament five days later – has avoided large-scale trade disruption but was notably light on provision for financial services. Prime Minister Boris Johnson conceded it “perhaps does not go as far as we would like” for the City.
But it did contain a no-obligation commitment to discuss better market-access arrangements for the City in the coming months.
Such arrangements will largely depend upon “equivalence” — EU regulators’ process for granting market access to UK firms if the country’s financial rules are deemed similar to its own. Legal and regulatory experts see little prospect of any quick and far-reaching agreement that would grant – and guarantee – this status for swathes of the UK industry, however.
Simon Gleeson, a partner at law firm Clifford Chance, said equivalence was a distant prospect for the City. “This will take several years to put in place,” he said.
Bank of England governor Andrew Bailey said of the 7,000 jobs lost so far: “That, of course, is a day-one thing, it doesn’t tell us what it might be eventually.”