S INCE BRITONS chose to leave the European Union in June 2016, the clichés have piled up almost as thickly as the votes: “no deal is better than a bad deal”; “Brexit means Brexit”. And you might count yourself rich—even by the City of London’s standards—if you had a fiver for every time you had heard a banker say his firm was “hoping for the best, but preparing for the worst”. Four months before Britain is due to quit the EU , financial firms have long ago given up hoping for the best (for most, that Britain would remain after all) and are still not sure they will avoid the worst—a sudden, no-deal Brexit on March 29th 2019. But they have been quietly bracing themselves for it.

Firms based in any EU member state may serve clients in any other: lending and raising money, trading and clearing derivatives, and insuring lives and property across the union without setting up shop locally, in a system known as “passporting”. London is by far the biggest base. If Parliament rejects Britain’s withdrawal agreement with the EU (a vote is due on December 11th), those London passports will expire in March. If it accepts the deal, they will run on while Britain and the EU sort out new arrangements. By June 2020 they should have frameworks to decide whether each other’s regulatory systems are “equivalent”, allowing some business to continue much as now. Either way, though, financial firms must keep serving their clients.

In preparing for Brexit, the financial industry has had three advantages over most other sectors. The first is size. Banks, insurers and asset managers tend to be big. Although they can imagine better uses for them, they have the resources for contingency planning. The second is regulation. Rules help you plan, even if Brexit’s final form is unclear. As things stand, for instance, banks and others will need bases in the EU27 . Equivalence is an uncertain prize because the EU ’s current rules allow it to withdraw its blessing at 30 days’ notice. And the clearing of derivatives is especially touchy (see article). The third is fear. No bank wants to tell a client on April 1st that it cannot execute a trade because the two are on opposite sides of the English Channel. And no supervisor wants Brexit to upset the financial system. Memories of 2007-08 are painfully but usefully fresh.

For two years and more, therefore, firms have been making preparations in other EU centres. Danièle Nouy, the head of the supervisory arm of the European Central Bank ( ECB ), said recently that 37 firms, including 25 banks, had secured new or improved licences or were close to doing so.

The ECB is insisting that banks set up more than mere “empty shells”, in which business is booked with EU27 clients while the real business—and risk—stays in London, outside its purview. This means shifting assets and installing senior staff, such as risk and compliance managers. In particular, the ECB wants banks to avoid being “overly reliant” on “back-to-back” hedging strategies—coupling a transaction with an EU 27 client in (say) its Frankfurt base with another internal deal, which moves the risk to its London balance-sheet.

According to Hubertus Väth of Frankfurt Main Finance, which promotes the German financial centre, 30 institutions are pitching camp in Frankfurt; the banks among them will shift €750bn-800bn ($850bn-910bn) of assets. Plenty of firms are building on existing foundations. HSBC is consolidating its E U27 banking subsidiaries in Paris, a city which also claims to have charmed a lot of firms; Bank of America and Barclays have chosen Dublin. And financial centres have developed specialities: Luxembourg, like Dublin, has pulled in insurers and asset managers; exchanges, such as the London Stock Exchange Group and CBOE Global Markets, have headed to Amsterdam.

Firms are not putting everything in one place. Brexit is prompting big banks to put more sales people, especially, in several cities, so that they will be closer to their corporate clients, reversing a 20-year trend towards concentration in London.

All of this means more jobs in EU 27 centres. It does not, however, yet add up to the Brexodus from the City that some feared. Some jobs—eg, in compliance—will have to be duplicated in London and the EU 27, meaning more jobs overall. Wall Street banks speak of having a few hundred people in their EU bases on “day one”, whether that falls in March 2019 or in 2020. Over time, however, local hires as well as moves from London will bulk up the numbers. Mr Väth foresees “significant” second-round effects. In future years both supervisors and clients may demand that banks employ more people inside the EU .

Supervisors are also getting ready. On November 28th the Bank of England said British banks had enough capital and liquidity to bear even a “disorderly” no-deal Brexit, in which current trade agreements with non- EU countries are lost, border infrastructure cannot cope with customs requirements and GDP is 10.5% below its pre-referendum trend by the end of 2023.

Yet preparing for the worst can only take you so far. One banker points out a difference between Brexit and M i FID 2, a burdensome EU financial-markets directive that came into force at the start of 2018. The industry knew what M i FID 2’s rules would be, prepared for it in a consistent way and could test its likely effects in advance. With Brexit none of that is true.

The financial industry’s post-Brexit fortunes will depend on the economic health of those they serve. If they are roughed up by a no-deal Brexit, finance will be too. Moreover, many customers, lacking know-how, resources and the constant prodding from nervous supervisors, are unlikely to be as well prepared. Hold on, and hope.