Goldman Sachs is considering shifting some of its assets and operations from London to Frankfurt, three people familiar with the matter said, as it tries to secure access to the European Union market when Britain leaves the bloc.
The U.S. investment bank is examining the step as a way to qualify for supervision by the European Central Bank, putting some of its operations under the watch of the euro zone’s main banking supervisor.
Coming under the ECB’s jurisdiction should allow it to continue selling its services to clients across the euro zone and wider EU post-Brexit, according to one person with knowledge of the matter.
However, this is uncharted legal territory and the sources said Goldman had not yet taken any decision on the matter.
“Moving under ECB supervision in Frankfurt is one of the options the bank is considering,” one of the people said. Another said Goldman had held talks about such a step with ECB officials in Frankfurt.
The plans being examined would shift Goldman’s European presence towards the center of the euro zone, representing a blow to London’s status as a global financial center—and a coup for Frankfurt, a small city that is Germany’s own finance capital.
A spokesman for Goldman Sachs said there were “numerous uncertainties” about the outcome of Brexit negotiations. “We continue to work through all possible implications of the Brexit vote,” he said. “We have not taken any decisions as to what our eventual response will be.”
An ECB spokesman declined to comment.
Goldman gs , whose services include broking and market-making in securities, foreign-exchange trading and corporate finance, currently relies on the EU’s “passporting” system. This allows it to sell across the region without setting up shop in each member state, while under the supervision of UK authorities.
But banks’ UK operations are expected to lose their passporting rights after Brexit.
Currently, U.S. banks concentrate the bulk of their European operations in Britain, with 88% of their regional employees based there, according to 2014 data from think-tank Bruegel.
A bank such as Goldman Sachs would typically qualify for ECB supervision if it increased the assets of its euro zone operations to 30 billion euros ($ 33 billion).
Goldman Sachs AG in Germany had assets of 551 million euros in 2015 according to filings for last year. The bank’s overall assets, however, in other entities in Germany and the rest of the euro zone are higher, according to the bank.
Goldman is keeping a floor vacant at its high-rise offices in Frankfurt which could accommodate any additional staff, one of the sources said.
The bank had initially intended to return this to the owner of the tower, where Goldman Sachs has occupied the top floors for more than a decade, but changed its mind after the Brexit vote.
Bankers in the City of London are worried that British Prime Minister Theresa May’s pledge to deliver a full exit from the European Union will mean banks lose their passports or automatic right to do business in the EU. Two years of talks to reach this are due to start in March.
Securing the City’s open access to the EU market, which lobbyists say is worth about 10 billion pounds ($ 12 billion) a year to the British economy, is crucial for the financial hub of London—a central pillar of the country’s economy.
Goldman Sachs’ Frankfurt office, which is focused on deal-making and selling securities in Europe’s biggest economy, is currently its largest European operation outside London. The bank also has smaller offices in other European cities including Paris, Madrid and Milan, providing similar services.
The bank has a comprehensive banking license in Germany but some services are delivered via London, using the passport system to sell to the wider EU – posing a problem in the event of a “hard Brexit” where Britain has no access to the EU single market.
Goldman Sachs’ assets in Germany are small compared with the roughly $ 850 billion of assets of Goldman Sachs in London. London is the bank’s headquarters for its operations in Europe, the Middle East and Africa.
Even were Goldman Sachs in Frankfurt to come under ECB supervision, its business in London would still answer to UK regulators.