JPMorgan is said to be looking at additional office space in Milan | Justin Tallis/AFP via Getty Images London banks get on with Brexit Banks and other City firms are losing faith in the government’s ability to deliver their preferred deal with the EU.

LONDON — It's not an exodus, but the Brexit-triggered flight from the City of London is very much underway.

Banks, asset managers, and even credit ratings agencies are tired of waiting on the politicians and are getting on with their Brexit contingency plans. As Chancellor Philip Hammond prepares to address finance players at a marquee City event Thursday evening, he knows their patience in the government's Brexit plans is running thin.

So far, the moves involve small parts of firms' operations.

But one London-based banking executive said JPMorgan is looking for a bigger office space in Milan, where it already has around 250 staff. Another banker said Goldman Sachs is planning to double the number of staff in Frankfurt, which currently stands at 400.

The source said that while risk and compliance officers would be hired locally, bankers would be transferred from the London headquarters. Another senior banker said the bank he works at has already spent over £200 million on Brexit contingency planning.

Meanwhile, asset management companies are opting to increase their presence in Dublin or Luxembourg. And last month, POLITICO revealed that Moody's is moving staff to Frankfurt. Fitch and Standard & Poor's have also announced similar plans.

The topic will be impossible to avoid at the dinner for merchants and bankers Thursday — the annual gathering of City top brass that was cancelled in 2017 and 2016 following the Grenfell tower disaster and the murder of an MP, respectively. While flattering his guests, the host, Lord Mayor Charles Bowman, will spell out in his speech the lack of clarity that City firms are facing.

“Being the world’s leading business center, London is the home of global competitiveness, creating jobs, tax revenue and financial security for millions across the planet. But for London to remain the home of global competition — for it to continue providing prosperity to all — it does need a clear plan, a financial services blueprint," the lord mayor will say at the dinner, which will also be attended by Bank of England Governor Mark Carney.

The City's ambassador will insist the U.K. needs "a deep and comprehensive bespoke agreement with the EU” encompassing mutual market access based on mutual recognition, continued access to the best EU talent, and a transition period.

But aspirational talk just isn't enough anymore, and firms are acting solo. "The idea that the banks will do whatever it takes to keep [their U.K.] business is completely wrong," said Simon Gleeson, a partner at Clifford Chance.

The City's former policy chief, Mark Boleat, said firms now simply don't have a choice. “It is no longer contingency planning. If you are running a bank, it is non-negotiable,” he told the Guardian Wednesday.

“This is a 10-year operation. In the short term, it won’t be noticeable in terms of staff. Banks won’t be putting out press releases saying they are moving some of their operations because of Brexit because they don’t want the publicity. They are just getting on with it," he added.

No more 'wait and see'

European regulators would like such moves to happen even faster. "It's been two years since the EU referendum, there is no more time to wait and see," one senior EU regulator said.

Yet the British government insists it is working on the "best possible deal" for the country, which, it says, should encompass financial services. In his address to the finance world's great and good, Hammond will have a fresh occasion to beat the drum for London as a global financial hub with a glittering post-Brexit future.

"Our vision is for a set of new partnerships, combining new tools, like free-trade agreements, and existing ones, like our financial dialogues [ultimately] positioning the U.K. as the most global financial services market in the world,” Hammond will say, according to remarks pre-briefed to journalists by the Treasury.

But skepticism among bankers is growing.

Banks declined to publicly comment on their plans but behind the scenes, executives admit they are concerned about the government's lack of understanding of the financial services industry and the rules that govern their businesses. Some also underline the contradictions between what they hear from either side of the Channel.

One crumb of comfort for the government is that the sheer cost of preparing for the worst-case scenario is preventing many firms from going all out with their contingency plans — for now.

"People are making arrangements so they can continue to serve customers, but those don't involve a significant number of people at this stage," Catherine McGuinness, the City's current policy chief, told POLITICO last month.

A 2017 Boston Consultancy Group report commissioned by AFME, a trade group, estimated the cost of Brexit restructuring could be as much as €15 billion, with the figure for each individual bank depending on its "current geographical footprint and client focus."

The estimate took into account the potential costs of creating new legal entities, re-writing customer and supplier contracts, building new technology platforms, risk management and compliance systems, as well as hiring new staff in the EU27.

With the costs of fully planning for no deal so high, Gleeson of Clifford Chance said no one wants to "fully execute" their exit plans if an optimal solution (which entails mutual recognition and maximized reciprocal market access) is still possible.

Hammond will want the City to hold tight. But his dinner companions' faith is already beginning to drain away.

This article is part of an occasional series, City of London: Is there life after death?