With the triggering of Article 50, US financial institutions are looking more closely at their Brexit plans and making sure that they’re up to date. However, there’s more to change to come, and you don’t want to be caught off-guard.
Today Article 50, tomorrow something else. Just this year alone, firms will need to watch elections in France, Germany, and Italy. Long-term winners will use Brexit to rethink their approach all the way from strategy through execution.
A good place to start is with a review of your current operating model. This is a good time to see if your current model still makes sense and to determine if you face any new business exposures as a result of Brexit. Some examples, depending upon where negotiations end up, include:
Beyond the geographic issues, firms should also think about how their specific sector could be affected. Banks, asset managers, and insurers each face different challenges as they move forward.
Depending upon how your firm is set up in the EU and UK, you may need a new legal structure even if you want to continue business as usual, and building a legal structure is difficult in the best of times. You’ll face many possible options, each with its own advantages and complexities. Firms should seek tax, legal, and strategic guidance as they continue to review and update their options.
As negotiations between the UK and EU get underway, time will appear to speed up, and you should act quickly. In many cases, you won’t know everything you need to know, so you should start filling in the gaps now. For example, do you have the demographic data to make strategic decisions if immigration rules change? Do you understand the potential tax implications should you decide to move some of your team members to a different country? Do you have the information you’ll need if you’re going to file for additional licenses in new jurisdictions? How will you determine which contracts you’ll need to update? Remember, all of the information you’ll need to answer questions like these may be scattered across systems, units, or even held by third parties.
Many US financial institutions have appreciated the UK’s considerable advantages when organizing their European operations. After Brexit, they may continue to do so, or they may diversify their approach. Whichever way you’re leaning, organize now so you’ll be ready to take advantage of whatever else 2017 and beyond brings.
Once you know what your strategic options are, you’ll then have to put a plan in place to carry them out. Be sure those plans are flexible because the situation in Europe may change. For example, if you decide to shift staff to Paris and the elections there take an anti-EU turn, how will you react?
Over the past year, there have been plenty of developments that took people by surprise. Each time it happens, there’s only one choice: acknowledge what has changed, analyze the major decisions that now lie ahead, and develop contingency plans accordingly.