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Lloyds could leave City of London over Brexit, says chairman

John Nelson warns the loss of 'passporting' rights would damage business.

Financial fallout: John Nelson issued stark warning in radio interview.
Financial fallout: John Nelson issued stark warning in radio interview. PA

Lloyds could quit the City of London following the UK's vote to leave the European Union.

Chairman John Nelson warned companies could start leaving London before Brexit negotiations are concluded unless the UK Government provides "clarity" about the country's future relationship with the EU.

Nelson said it was "critical" for the financial services sector to maintain the "passporting" rights which allow it to operate within EU countries, and warned Brexit may put foreign investment in the City of London at risk.

Overseas investors share London's interest in maintaining passporting rights and access to the single market, he claimed.

Mr Nelson fears "massive disruption" if companies are forced to change their operations.

He told BBC Radio 4's Today programme: "The issue is that if we do not get access to the EU single market, what will happen is that business will be written by us and others onshore EU. The loser will not be Lloyds or the industry - sadly, it will be London.

"There will be bits of business where it will be better for us and more efficient for us, if we don't get single market access if we write it in the EU."

He added: "Insurance business is quite mobile. If there is uncertainty for a prolonged period of time, then the industry will vote with its feet and we will be in that.

"If we do not see a clear direction of travel, we will have to invoke our contingency plans and that would mean business leaving London more quickly than the renegotiation timetable.

"Therefore, clarity is important, and clarity fairly soon."

Mr Nelson, who will set out his concerns in a speech in the City on Monday evening, added: "Lloyds is Lloyds, it is not Lloyds of London. 

"We operate right round the world. We have our biggest hub outside London in Singapore, we have big hubs in Beijing and Shanghai, and we have a hub in Dubai and big businesses in Latin America."

Lord Mayor of London Lord Mountevans insisted the City was "facing the future with optimism" and determined to "make a success" of Brexit and maintain its position as the world's leading financial centre.

He said the City was lobbying government to ensure it retains access to the single market and the ability to recruit key staff from the EU.

"We are stressing to the government that we do need access to the single market and I am optimistic that common sense will prevail and the solution we negotiate with our European partners will safeguard that," Lord Mountevans told Today.

"The City needs access to the right labour. About 10% of the jobs in the City are European Economic Area nationals - typically at the more senior levels - and we need access to the best European labour and other international labour. We need to continue to have that in the future."

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