BCS Barclays PLC

By Max Colchester and Lucy McNulty 

LONDON--The U.K.'s biggest financial groups met Wednesday with British Treasury officials to continue hashing out a negotiating position on Brexit, as executives try to reconcile diverging views on the deal the country should strike with the European Union.

U.K. Chancellor of the Exchequer Philip Hammond hosted chairmen from a group including Morgan Stanley International, Barclays PLC, HSBC PLC and the London Stock Exchange to gather information as the Treasury prepares to negotiate with EU members.

But federating the industry is proving complicated, according to people familiar with the broader negotiations.

"There are lots of people having all sorts of meetings all the time, discussing Brexit," says Barney Reynolds, Global Co-Head of Financial Institutions at law firm Shearman & Sterling. "The idea of the City having one set of key meetings is just nonsense."

The chairmen's group, the European Financial Services Chairmen's Advisory Committee (dubbed "F-SAC" in British banking circles) isn't alone in lobbying. There are around half a dozen organizations and trade groups--representing interests from asset management to insurance--that are trying to get the U.K. government's ear. Meanwhile big finance groups are also going to the treasury directly to share their views.

"There isn't a single point of contact," says one official involved in the banks' lobbying campaign. "And there isn't a single point of view."

The U.K. financial sector, which employs 2.2 million people, is jostling for attention from the Treasury along with other industries. Presenting a clear negotiating position is important to ensure key demands are met, analysts say.

It's unclear when the Brexit negotiations will start in earnest. Once the U.K. officially requests to leave the EU, a two year countdown commences. Banks broadly want to keep the ability to "passport," or sell their goods and services across the EU, and also want a transition period to ensure they can adjust to any changes to the status-quo.

Pro-Brexit campaigners, including several from the hedge fund industry, argued the City should use Brexit to deregulate. International banks want to keep as much access to the EU as possible, which would likely come on the condition of free movement of people and the imposition of EU made rules. Aligning other interests could prove complex. Small British focused banks, for instance, don't view passporting as much of a deal breaker. Big U.S. banks do.

Meanwhile bank executives are under pressure to formulate contingency plans for Brexit. Many complain that they can't make plans without more clarity on the type of Brexit the U.K. wants.

Even within the government there is uncertainty over how the negotiations will play out.

The U.K.'s newly created Department for Exiting the European Union, led by longtime EU skeptic David Davis, has primary responsibility for mapping the U.K.'s path out of the EU. But the Treasury, with its expertise and links to banks, will play a key role in negotiations with the EU on financial services, according to officials. It's not clear how the two will coordinate.

Write to Max Colchester at max.colchester@wsj.com and Lucy McNulty at Lucy.McNulty@dowjones.com

(END) Dow Jones Newswires

September 07, 2016 12:53 ET (16:53 GMT)

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