The world’s biggest investment banks will not reverse plans to shift billions of dollars and thousands of jobs out of the UK even if Britain ends up staying in the European Union, senior bank executives and people with knowledge of the plans revealed to Financial News.

In a big blow to the City, at least eight of the largest investment banks in London, including Bank of America Merrill Lynch, Citigroup, Goldman Sachs and JPMorgan, have said they will shift a significant proportion of their operations to Europe irrespective of the outcome of Brexit.

The move would harm the City of London’s status as a global financial centre. Banks are already preparing to move hundreds of billions of dollars from London to the continent after Brexit. Deutsche Bank is reportedly set to shift €400bn from its balance sheet to Frankfurt, while JPMorgan will move €200bn to the German city.

“Everything is timetabled, and once the plane is on the runway, it’s not going to be called back,” said a UK head at a large investment bank based in the City.

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The head of investment banking at another company with a significant UK presence said there was no chance its plans would be reversed. “We have spent money on this, we have a structure that we like. The staff we have moved out would not go back to London."

The top 10 investment banks have already spent at least £1bn on preparing for the UK’s impending exit from the EU. This figure could spiral further, and the shift towards Europe means London will become a much smaller financial centre whatever the outcome of Brexit.

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“You cannot put the genie back in the bottle,” said Andrew Gray, global head of Brexit for financial services at PwC, the accountancy firm. “Banks have committed to a business model with regulatory bodies. To not deliver on those plans would be problematic.”

“London has permanently lost market share,” added a chief executive of an international bank with a significant presence in the UK.

British Prime Minister Theresa May is currently engaged in cross-party talks after having her Brexit deal thrown out by parliament earlier this month. The prospect of Britain leaving the EU without a deal has increased, but the City's largest investment banks have been planning for a worst-case scenario under which they would lose access to the single market on March 29.

As well as a no-deal scenario, May's arrangement could be sent back to Parliament for a second vote or she could return to the EU to renegotiate. If talks hit a deadlock it could trigger a second referendum or even a general election.

According to a survey by EY, the accountancy firm, 7,000 jobs could leave London. The financial services sector employed 1.1 million people in the UK in 2017, according to the latest statistics from the House of Commons Library, and contributed £119bn to the UK economy, or 6.5% of total economic output.

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Staff moves are already underway at large investment banks. Goldman Sachs, which eventually plans to move 700 jobs to Europe because of Brexit, has shifted around 80 bankers to the continent as part of a broader push in region, while up to 20 fixed income sales staff have been relocated to Paris. Morgan Stanley plans to have 50 bankers in Frankfurt as part of initial relocations, while Deutsche Bank, BNP Paribas, Credit Agricole, Societe Generale and UBS have all asked staff to move.

Longer term, bank executives say Brexit will change the way they recruit staff.

“London would have been the natural choice to hire new bankers. Now, after the investment we’ve made in Europe, if someone leaves in the UK or we want to recruit someone, we’re just as likely to base them in Frankfurt or Paris,” said one European chief executive of a US investment bank.

Banks are unlikely to move people back in the event Brexit is overturned, said Jenni Hibbert, global practice managing partner at Heidrick & Struggles Financial Services, the recruiter. “If they do, it won’t happen overnight”, given the cost and effort involved.

The damage inflicted in the Square Mile will be permanent, said another head of investment banking. “London as a financial centre will remain, but will be severely diminished.”

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