Brexit caused the restructuring of JP Morgan in Spain. According to the Bank of England yesterday, the world’s leading investment bank closed its branch in Spain, JP Morgan Securities Plc. It has made its business in the country dependent on two companies.
JP Morgan operated in Spain through a subsidiary based on a UK-based company, JP Morgan Securities Plc. The European Union allows an entity registered in one of the member states to operate in the rest of the community club through a branch dependent on this community, without the need to open branches in each country. Something that allows banks to loosen their structure and reduce bureaucracy. The CNMV and Bank of Spain co-oversee with the regulators in the country of origin, as well as the regulations that will be applied.
The problem is the UK’s exit from the European Union, which has been fully in place since 1 January. This has led to the large international banks, which conduct all their activities in the European Union from London, to search for new locations. And that those branches, which are associated with the English parent company, and with which they were working in countries such as Spain, France or Italy, cease to operate. In other words, the major banks were left without an umbrella to be able to operate in the European Union.
Consequently, the large international banks were forced to restructure internally to protect their business from Brexit. They have established new companies in the countries that are still in the European club and which they have made their businesses dependent on in the rest of the geographical regions of the club.
In JP Morgan’s case, she decided to separate her business in Spain. It has established two branches. One of them is JP Morgan AG, which is based in Germany, and which will operate most of the bank’s business in Spain. The other is JP Morgan Bank Luxembourg, which is based in that country and is directed to the Treasury Products Sales and Marketing departments.
Although the Bank of England took up yesterday to authorize the Bank of Spain for this move, JP Morgan has been operating this way since July. Basically, nothing has changed for JP Morgan’s clients in Spain.
Big investment banks have taken advantage of Brexit to rearrange their business in the European Union. For example, Morgan Stanley canceled its subsidiary in Spain, merging it with its German-based parent company. Now operating in Spain as a branch in Frankfurt. On the other hand, Credit Suisse chose Madrid as one of its centers in the European Union after Brexit, on which its activities in France, Italy, the Netherlands and Sweden depend.