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Comment by tablloyd | Hacker News Reader

I'm skeptical of Brexit being the reason that N26 is withdrawing from the UK. They started operation in the uk in October 2018, over 2 years after the referendum result and 6 months before the UK was meant to leave until the date got pushed back.

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This is the problem, no one believes the draw backs of leaving the EU even when businesses are literally pulling out of the country and directly saying it's because of regulatory divergence. It used to be that you could access 500m customers with one set of regulations. Now you can access 450m customers with one set of regulations, and you can access 60m with another, as yet undefined, set of regulations that are guaranteed to change over the next few years. It doesn't take a genius to see that that uncertainty is going to take a toll on business, but it does take a planet brain genius to know that's happening, hear from actually businesses making decisions based on it, and then decide it's not really an issue.

You're correct. Nobody believes them because so many of these so-called drawbacks have turned out to be lies.

For instance, Goldman Sachs repeatedly claimed they'd be moving their business to Frankfurt in the case of a Leave vote. They even funded the Remain campaign. Now they leased their HQ in London for 25 years: https://news.sky.com/story/goldman-sachs-commits-to-uk-despi... - apparently not planning to leave the country after all.

The EU Commission said it would ban EU companies from trading with British financial in the wake of Brexit. The IMF said it would "cripple" the UK. Brexit supporters said that cutting off the EU from all British financial services would be so self-defeating the Commission wouldn't do it. I was skeptical personally, but so far they were proven right. The Commission keeps extending the so-called "financial passport": https://www.telegraph.co.uk/business/2019/12/02/eu-threats-c...

N26 say they're leaving because of Brexit, but chose to enter after they knew Brexit had been voted for and the process was well under way. How likely is it this is true, vs N26 failing in the market but being run by a bunch of Remainers who want to deliver a "fuck you"? If they really only just realised now Brexit was happening then they are a monumentally incapable company.

By the way, the EU's unified financial regulation creates problems as well as solutions. For instance it prevented British regulators from stepping in to prevent the foreseen collapse of Icelandic banks. The Icelandic government ended up not having sufficient funds to bail them out. It's discussed here:

https://leftfootforward.org/2016/09/brexit-is-the-financial-...

The government's recommendations after that incident were basically to introduce caveats and more regional control over financial regulation.

Your Goldman link shows Goldman selling their UK headquarters and leasing it back. A headquarters they planned before Brexit. It provides no information as to whether Goldman plan on sub-leasing. The financing of one of their buildings tells you nothing about hteir operations.

Your second claim- that the EU commission would 'ban' EU companies from trading with 'British financial' in the wake of Brexit. I'd love to see a source. You know, a source that doesn't caveat things like "if Britain diverged too far". Oh by the way, I work for a finance company that's moved its legal entity to Amsterdam- so those scare stories are literally what has happened.

I'd love to see any reference you have to what you were claiming would happen with Brexit in 2016. Any reference, because I bet you whatever you thought would happen is wrong. But I'm sure you've got good sources for your conspiracy theory that everyone who points out a problem with Brexit is secretly pushing an ulterior motive. Talk about the damage brexit is doing? you must be 'monumentally incapable' - or, you know, actually running a business.

Leasing it back ... for 25 years. Pretty critical detail you left out there! Why would you sign a 25 year lease on an expensive HQ for thousands of people if you were about to leave the country?

The EU revoking financial "equivalence" for non-financial reasons is a very well known phenomenon that was extensively discussed in and around the referendum time. They did it to Switzerland so there's been more since. For instance:

https://www.theguardian.com/politics/2016/jun/25/london-city...

“If tomorrow Britain is not part of the single market, the City cannot keep this European passport,” Villeroy, who is also governor of the French central bank, told France Inter radio.

Note: no mention here of divergence, merely leaving the single market is enough to be immediately banned. There was lots like that at the time, although it's getting harder to find pre-referendum pages via search engines now.

I work for a finance company that's moved its legal entity to Amsterdam

Nobody ever cared about legal entities. But note you've done that in anticipation of the UK being banned from European markets, despite having no specific announced plans to change financial law in ways that would justify such a ban.

Not sure if you actually follow Brexit but the situation now is completely different to the last 2 years.

Michael Gove this week formerly advised businesses that the UK is going down the hard Brexit path i.e. leaving the customs union, single market and with full regulatory divergence from the EU.

Under these circumstances it is impossible to run a business like N26 in the UK serving the EU.

> Under these circumstances it is impossible to run a business like N26 in the UK serving the EU.

you have this the wrong way round: they are a bank based in the EU that was passporting their German (EU) license into the UK

in the near future they will not be permitted to operate in the UK as the UK will no longer accept their EU banking license

That's not actually certain. The UK has no fundamental reason not to recognise EU banking licenses, although it may choose not to, or to recognise it but require additional compliance.

The UK may end up being 'forced' to not recognise such licenses in retaliation if the EU refuses to recognise British licenses. This is quite likely to happen because the EU has a track record of revoking financial licensing as part of trade wars with European countries. For instance they revoked acceptance of Switzerland's financial licenses as part of trying to pressure the Swiss government to cede significant powers to Brussels.

> That's not actually certain.

well, you can argue but it's a matter of UK law: http://www.legislation.gov.uk/uksi/2018/1149/regulation/2/ma...

the PRA has stated that EEA firms will require a license (with some temporary transition arrangements:

> Passporting rights will now cease at the end of the transition period. Once passporting rights cease, EEA firms currently operating through a passport in the UK under the existing European passport framework will require a Part 4A permission under the Financial Services and Markets Act (FSMA) to be able to continue carrying out regulated activities in the UK.

see https://www.bankofengland.co.uk/eu-withdrawal/temporary-perm...

> This is quite likely to happen because the EU has a track record of revoking financial licensing as part of trade wars with European countries. For instance they revoked acceptance of Switzerland's financial licenses as part of trying to pressure the Swiss government to cede significant powers to Brussels.

this is the worst example possible you could have given, the result of the loss of equivalence was that the Swiss gained business, while EU firms lost business

They operate in multiple countries that are not part of the EU.

But they appear to be already operating in other non-EU settings. What would make the UK any different?

I agree with your skepticism, but it's important to note that Brexit being pushed back implied that it might not happen, or that it might be very soft. It wasn't certain until a couple of months ago, when the vote effectively reaffirmed Brexit (or at the very least, that the Remain vote was so badly confused as to make it a fait accompli).

So there is almost certainly more going on here than Brexit, but there's also a chance that they were hoping that a soft/nonexistent Brexit would create a more favorable environment.

Really, as a pure outsider, I think anytime you redo a vote on something like this as many times as they did you increase the odds of success (leaving the EU) to 1. People will eventually switch their vote just to not have to vote any longer. It’s not necessarily a ringing nor deep endorsement of the change.

There were two referenda on EU membership in the UK in the last fifty years.

If you leave out the snap election(s).

Really, there was just the one referendum, and it succeeded. It was confirmed twice later, once weakly, and a second time more strongly, via parliamentary elections that both gave power to the pro-Brexit party.

I don't believe that this constitutes a ringing endorsement of Brexit, and has more to do with the failure of the Remain-focused politicians to pull together properly. But Remain was given three tries to win, and it screwed up royally last time. I do not believe it is the right choice, but it is a fait accompli and they must deal with that.

Right. They repeated whatever election processes it took to get the outcome they wanted. Sauce it up with whatever you want it’s still manufacturing consent.

I'm not sure I understand what you're getting at here. Leave won the first try. If anybody could be accused of trying for do-overs, it's Remain. In the last snap elections, one party talked about a possible new referendum, and the other outright promised to throw out the first referendum. The latter party got destroyed, and the former was merely trounced, largely on the basis of being wishy-washy.

Even in the ill-considered first snap election, the pro-Brexit Tory party was still the dominant party, despite losing seats. They came roaring back after getting new leadership that was more confidently pro-Brexit.

I reiterate that I think that this is all an incredibly bad idea, and I believe it represents a failure of democracy. But Remain had multiple chances, and lost all of them, the last time resoundingly.

Back then, the government were still talking about keeping the same benefits of membership after we leave.

No, they were talking about doing that or leaving without a deal. That message didn't really change until the Chequers speech in July 2018, when no deal was essentially taken off the table.

Leaving without a deal under May was a meaningless threat. It was never going to happen and Parliament had the numbers to prevent that from logistically happening anyway.

The difference now is that Johnson has the numbers, the mandate and the will for a no-deal Brexit. And Gove has just warned businesses this is happening:

https://www.theguardian.com/politics/2020/feb/10/checks-on-e...

It's easy to say that with hindsight. At the time it wasn't so clear. Well, perhaps it was after the general election in '17. But then it was also clear that the political situation was very unstable and could change again at any moment, which it eventually did. It would have been pretty arrogant to presume that things were going to be business as usual.

There is no such thing as leaving without a deal.

No deal simply meant the UK would now have to negotiate hundreds and thousands of piecemeal deals instead of a single, simpler, quicker, omnibus starting deal based off existing rules.

That’s assuming the UK didn’t want famines because they couldn’t import food, didn’t want unnecessary deaths because it couldn’t get medicines, didn’t want Heathrow to shut down because planes wouldn’t be able to fly over Europe, didn’t want the bulk of their service exports which form the majority of their exports to disappear overnight etc.

They weren't. This was never an option for banking, it is heavily protected almost everywhere (even within the Single Market).

The issue is that the UK is a very hard market: infinite competition from startups that are well-capitalised, and huge mega-banks that invest heavily in technology and run at low cost. For example, Lloyds has £400bn in retail deposits and cost/income of ~50%...German/French banks run closer to ~75-80%. We have some laggards (RBS) but generally, it is very tough (as are the Nordics).

In fairness, only last month did the exit date become completely certain. The UK has now “left”, on paper, and in practice it leaves at the end of this year. If they were waiting until there was no more uncertainty, this is the perfect time almost.

Not if they were thinking that their European license would still work post Brexit and will have an easy path to conversion of that license when needed. Seems like a reasonable assumption.

Most people didn’t think the UK would actually leave, including a large part of the people who voted to leave.

i suspect this is being used as an excuse to leave the UK.

In the sense that "Brexit means N26 needs to now file a lot of license paperwork that wasn't necessary under EU law," yes.

If they believed their business would make them money in the UK, filing paperwork wouldn't be an issue.

Exactly. And it may have made them money outside of a Brexit context, and the calculus has changed post-Brexit.

This was the failure mode people opposing Brexit anticipated.

Making money isn’t enough, there’s also opportunity cost for not just money but finite administrative attention. For the same burden they could be pursuing a much larger EU market.

I've never even heard of them....

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