City proponents of a so-called Brexit see it as a way of making the financial industry more globally competitive by potentially unshackling it from some EU rules like bonus caps. But while the 1980s Big Bang attracted international firms, the leaders of global banks say a Leave vote would drive them away.
They employ the lion's share of the 400,000 workers in the financial district and have been clear about their intentions. JPMorgan Chase chief executive officer Jamie Dimon has 16,000 employees in London and other British cities, and this month told staff a vote to leave could mean a quarter of those jobs might be cut.
Executives at Citigroup, Goldman Sachs and HSBC have all issued similar warnings. On Wednesday, Deutsche Bank Chairman Paul Achleitner said Brexit would be "an economic disaster for the U.K.," where the lender employs more than 8,000 people. It doesn't help that it's also a delicate time for bankers in general; worries about the outlook for the global economy coupled with a slump in commodities markets have depressed trading while low interest rates have squeezed revenue.
Central to the Brexit concern is the issue of "passporting." Under EU law, a bank incorporated in any one member state can sell its products and services in all 28, thus accessing a US$19 trillion integrated economy with more than 500 million citizens. It's a regime that allows even the largest banks to get by with only satellite offices in hubs like Paris and Madrid, and none at all in many other EU countries, keeping the overwhelming bulk of staff in London.
Like every other aspect of the EU's relationship with the U.K. after a Brexit vote, passporting would be up for negotiation with no guarantees it would remain in place. The same would be true of the ability of London trading floors to continue euro-denominated trading and settlement without restriction.
"It's an illusion that passporting will continue if we leave," said Peter Sands, 54, who ran Standard Chartered from 2006 until last year. "It's therefore incontrovertible that banks that serve Europe from London will have to move significant numbers of people."
Immigration law would be another worry; London banks are thick with French, Spanish and Italian citizens who've never had to apply for a British visa thanks to the EU's free-movement laws, and whose future status would be unclear.
Talks to clarify those questions would take years, and the bloc's political leaders say they aren't likely to grant any special favors. Last week Germany's deputy finance minister emphasized that "there has to be a difference between being part of the family or just a neighbor." Without a clear distinction, Jens Spahn told ARD Television, "it doesn't make sense to say that there's added value to being a member of the European Union."
"The real problem we have in this is, nobody has a clue what 'Out' looks like," said Alistair Darling, 62, the former chancellor of the Exchequer who oversaw the rescue of Royal Bank of Scotland Group Plc and other lenders. "We do not know what the consequences would be. The referendum is just the beginning of the process."
The Leave campaign, fronted by former City commodities broker turned U.K. Independence Party leader Nigel Farage and previous London mayor Boris Johnson, has argued the U.K. will be in a strong position to win rapid concessions from the EU because of the size of its economy. When it comes to the financial industry, they say, Britain would be able to regulate itself as it sees fit.
With polls showing the vote will come down to the wire, their contest with the Remain side got increasingly bitter last week. Chancellor of the Exchequer George Osborne was accused of economic scaremongering while Bank of England Governor Mark Carney hit back against claims he sacrificed his independence to support the government. Campaigning was then suspended following the murder of Labour lawmaker Jo Cox, an advocate for remaining in the EU, in her Yorkshire electoral district.
The transformation of the City into a dynamo capable of driving much of the British economy has been stark. Before the Big Bang, when Britain's financial markets were heavily protected from foreign competition, it was staid to the point of sedation. The bankers were overwhelmingly British, the workdays short and the lunches often liquid.
Determined to shake up the markets, Thatcher abolished fixed commissions, allowed large banks to take over brokerages, and opened the London Stock Exchange to overseas players. The subsequent boom made many bankers and traders rich, not without substantial bitterness from those left out - especially since their prosperity coincided with the collapse of Britain's heavy industry in the poorer north, though some big banks since have set up back office operations outside London.
Backers of Brexit within finance, who include Shore Capital founder Howard Shore and hedge-fund manager Crispin Odey, say a more independent City would be better positioned to chase global opportunities, while retaining access to the European market through a generous post-departure settlement.
The architect of the Big Bang agrees with them. "The real threat to the City comes from not leaving" because of expanding EU regulations that will hold back British finance, said Nigel Lawson, 84, who served as chancellor under Thatcher. "I don't think EU membership has had a huge impact on the City's success."
To be sure, many of London's advantages aren't at all connected to its EU status. The English language, a respected court system, good universities and transparent government are all draws for financial firms. So too are the pleasures of living in one of the world's great cosmopolitan cities -- which many bankers might be loath to trade for the more modest charms of, say, Frankfurt.
While Brexit would certainly be disruptive, "factors that are intrinsic to London" mean it will remain an attractive destination for finance whatever happens on June 23, said Mohamed El-Erian, the chief economic adviser at Allianz SE and a Bloomberg View columnist.
But the City's success is closely bound up with EU membership, argues Peter Mandelson, a former Labour Party minister and European trade commissioner. Under former Prime Minister Tony Blair in the 1990s, he was instrumental in re-branding Labour as a champion of the City, making its prosperity a bipartisan priority for the first time.
"London has grown as Europe's financial center because we are part of the EU single market, because we're part of the action," Mandelson, 62, said. If Britain leaves the EU, London "won't end as a financial center, it will just be second-tier," he said. "The golden goose will be maimed. The question is, how much?"
