Senior German banker issues London exodus warning

Andreas Dombret, who is a member of the executive board of the Deutsche Bundesbank with responsibility for banking and financial supervision, risk controlling and the bundesbank’s representative offices abroad, said euro clearing services cannot continue to take place in London, pinpointing Germany’s financial capital as a “more appropriate alternative”.

Mr Dombret, who holds dual German-American citizenship, said banks may also look to set up subsidiaries in countries within the EU if Britain breaks free of the single market and London-based lenders no longer have access to the bank passporting system.

He said: “I am convinced that, in the medium term, euro clearing cannot take place to the existing extent in London – Frankfurt would be the more appropriate alternative.”

Industry concerns following the Brexit vote have centred around the UK’s membership of the single market and whether it will continue to have access to the bank passporting system.

Banks and financial firms wanting to trade with a country in the European Economic Area (EEA) must apply for a passport, which allows them to sell their products to any country within the EEA.

However, the European Central Bank (ECB) has warned that Britain would not be able to access the passporting system without remaining a member of the single market and abiding by its rules, which includes the free movement of people.

Up to 80,000 jobs could be shifted out of London and into rival financial centres across Europe in the wake of the Brexit vote, according to a recent study.