Insurance market Lloyd's of London has chosen Brussels as the site for its EU subsidiary because of its strong regulatory framework, it said on Thursday. As Silvia Antonioli reports, the decision raises fresh questions over the future of the UK's lucrative financial services industry as it heads towards Brexit.
Lloyd's of London, the world's biggest insurance market, is taking out its own insurance ... on Brexit. Less than 24 hours after Britain formally triggered the divorce from the EU, Lloyd's said it will set up a subsidiary in Brussels. It argues that an EU branch is VITAL if Britain loses access to the single market after leaving the bloc. (SOUNDBITE) (English) LLOYD'S OF LONDON CEO, INGA BEALE, SAYING: "We wanted to have a really top quality robust regulator. Brussels, or Belgium's regulator fits that bill. We also wanted to have access to talent. So, we need to hire some really good people and we felt that that was an excellent place to go." Some fear an exodus from the UK. Goldman Sachs and JP Morgan among those already warning a major shift from London to the EU is inevitable - if Britain loses access to the single market. (SOUNDBITE) (English) THINK MARKETS, CHIEF MARKET ANALYST, NAEEM ASLAM, SAYING: "In the next few months and quarters we are going to see these headlines more and more. From where? The insurance industry, Prudential, AIG, Goldman Sachs, JP Morgan, Barclays, HSBC, the list just keeps going on and on. There is no stop to that." Firms are already knocking on Germany's door. Paris, Milan, Amsterdam and Dublin also trying to lure big firms. But with the financial sector so KEY to the British economy - the UK government may try to make them think twice about saying 'goodbye'. (SOUNDBITE) (English) THINK MARKETS, CHIEF MARKET ANALYST, NAEEM ASLAM, SAYING: "They could give them tax breaks, they could give them better regulation - but would that really substitute the access to the bigger market? Is that corporate tax going to be enough for them to substitute the extra clients that they have got throughout the Euro (area)?" But even if it isn't, the EU is already offering incentives and fast-track regulation of its own. One way or the other - UK-based financial firms still likely to gain, rather than lose, in the end.