Bloomberg Television’s Erik Schatzker talks to Morgan Stanley President Colm Kelleher about Brexit’s impact on banks, revealing that the firm would consider moving its European headquarters from London to possibly Dublin or Frankfurt.

Kelleher says:

  • “We’re hoping that the British voter will show sense and listen to the economic arguments and stay. But we clearly are looking at our plans,” adding that the New York-based firm would consider moving its European headquarters from London to Dublin or Frankfurt.
  • “This will be the most consequential thing postwar that we’ve ever seen.  Initially, the fallout can be controlled, but the political ramifications are actually quite profound.”
  • “London cannot not suffer in the event of a Brexit vote, and the reason for that is historic. London has done very well by virtue of being part of the European Union. Its market, the exchanges, clearing, everything is based on London.”
  • “Even if the U.K. opts to remain, markets are unlikely to climb significantly or return to higher trading volumes because of prolonged low interest rates and growth.”
  • When asked if the U.S. election also affected markets, Kelleher cited oil and China as reasons for investor indecision.

Morgan Stanley Eyes Dublin, Frankfurt For Post-Brexit HQ

Morgan Stanley Eyes Dublin, Frankfurt for Post-Brexit HQ

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  • Vote seen as most consequential in Europe since World War II
  • ‘Quite profound’ ramifications, Morgan Stanley president says

A U.K. vote in favor of leaving the European Union would be the most significant geopolitical event for the Continent since the end of World War II and could prompt Morgan Stanley to move its local headquarters to Dublin or Frankfurt from London, said bank President Colm Kelleher.

“This will be the most consequential thing postwar that we’ve ever seen,” Kelleher said Wednesday in an interview on Bloomberg Television with Erik Schatzker. “Initially, the fallout can be controlled, but the political ramifications are actually quite profound.”

Financial markets have been on edge ahead of Thursday’s U.K. referendum on membership in the EU. The latest polls show the outcome is too close to call, though betting shops on Tuesday put the probability of a vote to leave the EU at about 26 percent. The uncertainty comes as investors are grappling with continued signs that global growth remains tepid.

“We’re hoping that the British voter will show sense and listen to the economic arguments and stay,” Kelleher said. “But we clearly are looking at our plans,” he said, adding that the New York-based firm would consider moving its European headquarters from London.

Kelleher, 59, has run the the firm’s investment bank and trading division since 2013 and gained oversight of the brokerage in January, when he was promoted to president. He’s worked at Morgan Stanley or predecessor firms for more than 25 years.

Visas, Labor

A so-called Brexit would cost a material number of U.K. finance positions as things like the clearing of the euro currency would shift to the continent, he said, adding that over the longer term, there would be issues related to visas and the movement of labor.

“London cannot not suffer in the event of a Brexit vote, and the reason for that is historic,” Kelleher said. “London has done very well by virtue of being part of the European Union. Its market, the exchanges, clearing, everything is based on London.”

Even if the U.K. opts to remain, markets are unlikely to climb significantly or return to higher trading volumes because of prolonged low interest rates and growth, he said. When asked if the U.S. election also affected markets, Kelleher cited oil and China as reasons for investor indecision.

“What we have seen generally is a big falloff in client volumes, and you’re seeing that because of a lot of uncertainties,” he said. “It’s a number of things causing people to be very nervous at the moment. And we have seen a falloff, a significant falloff, and some could argue even a secular change because of the changes.”