By Olivia Oran
(Reuters) – Morgan Stanley Chief Executive James Gorman said on Wednesday he has “no clue” how the bank should allocate employees in Europe following Britain’s vote to leave the European Union.
Speaking on CNBC following Morgan Stanley’s second-quarter earnings, Gorman said there remains a great deal of uncertainty on the impact of Brexit, and the bank is “not having a knee-jerk reaction.”
Gorman said he told employees in London earlier this week “everybody cool your jets, just settle down … nothing precipitous is about to happen.” Gorman said he expects the aftermath of Brexit to unfold over five to ten years.
Morgan Stanley and other banks may need to have a European headquarters in a major city outside London, Gorman said, but the UK will still remain “a critical part of our global footprint.”
Having a headquarters in the European Union is important to banks and financial companies as it allows firms in one EU country to provide services to clients elsewhere in the trading bloc, under a system known as “passporting.”
It is unclear if Britain will keep its passporting rights if it leaves the European Union.
Morgan Stanley reported lower second-quarter profit on Wednesday but beat analysts’ expectations through strong bond trading revenue and by cutting expenses.
(Reporting by Olivia Oran in new York; Editing by Bill Rigby)