Goldman Sachs calls for 'significant' Brexit transition deal

The boss of Goldman Sachs International has called for a "significant" Brexit transitional agreement to be agreed as soon as possible to stem the outflow of jobs towards the European Union.

Richard Gnodde said the US banking giant was counting the cost of drawing up contingency plans to deal with the Brexit fallout, which involve increasing the bank's workforce in the European Union to shift its European hub away from the UK after Brexit.

The bank, which employs 6,500 staff in the UK, has previously indicated it would have to add hundreds of staff to its offices in Paris, Frankfurt and in other European locations. The positions would be filled by hiring people locally as well as relocating staff currently based in London.

The measures, however, are costing the bank money "every single day", lamented Gnodde, who is the lender most senior employee outside the US.

"The other way to describe the contingency plan is that we're buying insurance, so I'm spending money every single day to make sure that come March 2019 I'm open for business," Gnodde told the BBC.

"If I knew today that we would have a significant transition period I could stop spending that [contingency] money because I know I would have time to transition my business.

"If they [the government] tell me in February 2019 there will be a transition period - well, I've already spent all that money, it's not much use to me. At that point the transition period doesn't really help - so the sooner we know ... that's obviously helpful to us."

Gnodde added the number of people who would be relocated from the UK to Europe could change depending on the terms of the final Brexit agreement, although he expects London to retain an important role within Europe's financial sector.

"We will maintain a very significant presence in London. But if the rules require us to have more on the continent we will have more on the continent," he said.

Gnodde's comments come on the same day as Bank of America Merrill Lynch (BofA) revealed Dublin will act as its EU hub after Brexit.

The investment bank said its existing Irish subsidiary will merge with the London-based division, which is currently the lender's most important unit in the EU. BofA will also set up an EU trading operation in Ireland, which will require approval from the Republic's central bank.

"The question of what gets located everywhere is a long-term question based on a set of rules which no one has negotiated yet," said group chief executive Brian Moynihan.

On Thursday, the chief executive of Deutsche Bank revealed the lender was preparing for a Brexit outcome that is "worse than people can imagine".

"There's an awful lot of detail to be ironed out and agreed; depending on what the rules and regulations turn out to be, we will try to minimise disruption for our clients and for our own people," John Cryan said in a video message to the bank's staff.

Earlier this week, it emerged Morgan Stanley had picked Frankfurt to be the hub of its European operations after Britain leaves the EU.

According to the reports, Morgan Stanley, which currently has most of its European staff in the UK, where it employs around 6,000 people, could move as much as 1,000 employees to Frankfurt.