Brexit will lead to about 3,000 new jobs being created in Luxembourg as UK asset managers and insurers bulk up operations in the Grand Duchy to avoid being cut off from EU customers, a senior Luxembourg financial official said on Wednesday.

Nicolas Mackel, chief executive of Luxembourg for Finance, a body which promotes the country’s financial sector, said actual numbers would hinge on the trading terms Britain secures with the European Union after Brexit in March 2019.

Several London-based asset managers and insurers have already announced plans to bolster operations in Luxembourg.

“From what I see now, if you projected all the different actors together, my guesstimate is about 3,000 in the next two years, but then that will change and grow probably,” Mackel told Reuters in an interview.

Most of the jobs will be local hires in asset management rather than shifting people from London, Mackel said.

After the initial wave of job losses in Britain to set up EU licensed businesses, the “second wave” will comprise an erosion of London’s financial centre over 5-10 years as office leases are not renewed, staff who leave are not replaced, and people decide not to work in Britain in the first place, he said.

Tokio Marine said on Wednesday it was applying for regulatory approval to set up shop in Luxembourg, making it the ninth insurer to choose the Grand Duchy.

Luxembourg is home to 60,000 financial services jobs and, like Dublin, Paris and Frankfurt, is seeking to attract a slice of London’s “City” financial district because of Brexit.

Mackel said firms based in London that need an EU beachhead were planning to spread operations across several cities.

“It’s not one takes it all. There is a lot of hype,” he said.

Luxembourg is scrutinising new, non-binding EU guidelines for national regulators on how much of a footprint asset managers from London must have to obtain a licence in an EU state after Brexit.

Mackel said the worry was that the bloc would build on the guidelines and make it harder for asset managers to “delegate” key operations like managing portfolios from an EU base to staff in a country outside the bloc.

Delegation is common globally, with many managers in New York and Hong Kong managing funds in the bloc.

“Suddenly in Brexit this becomes an issue, and the industry does not understand the problem (EU regulator) ESMA is trying to solve. Europe is not the only option for asset managers,” Mackel said.

- Reuters