Brexit Fallout Could Mean Positive News for US Banks
- Brexit repercussions on banks may not go the way experts predicted.
It is just a matter of time before US banks operating in the UK and European Union have some potential regulatory and staffing matters to deal with following June's Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term vote.
However, they may not be the issues the experts initially projected, according to a CNBC article today.
Employment
Immediately after the Brexit referendum, large-scale layoffs at the UK arms of US banks were projected, with Morgan Stanley reportedly saying it would cut 2,000 jobs. But now, according to one expert, bank staffers may have little or nothing to worry about.
John Stadtler, U.S. financial services industry group leader at PwC, said: "I'm not sure it's going to be layoffs; it's going to be shifts of employees. Post-Brexit, you will have more jobs in countries in the European Union and UK. The question is, where those jobs will be."
Mergers and Acquisitions
A further unanticipated after-effect of Brexit is that US banks could grow bigger, rather than smaller. They will need to expand their presence in the EU which could be done by buying a bank with all the required regulatory approvals in place.
US firms have had their key European operations headquartered in London for years, but when the Brexit is complete, US banks will have to head somewhere else which could mean acquisitions.
At a time when most large U.S. financial institutions are effectively restricted from growing much larger at home, thanks to post-crisis regulation, a PwC report suggests that they may have to engage in mergers and acquisitions in order to meet their new requirements.
Maintaining European Economic Area (EEA) passporting rights, or being allowed to continue EU operations, could require making a deal, according to the report.
Kim Betancourt, director of economics and multifamily market research with Fannie Mae, said that international investors looking to sidestep UK and EU Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term may aim to hedge against bets by investing in the United States.
Hence, a potential upside looks to be coming to the US economy and potentially to US banks, but with no formal Brexit, at least until the beginning of 2019, a big fallout is not expected any day soon.
It is just a matter of time before US banks operating in the UK and European Union have some potential regulatory and staffing matters to deal with following June's Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term vote.
However, they may not be the issues the experts initially projected, according to a CNBC article today.
Employment
Immediately after the Brexit referendum, large-scale layoffs at the UK arms of US banks were projected, with Morgan Stanley reportedly saying it would cut 2,000 jobs. But now, according to one expert, bank staffers may have little or nothing to worry about.
John Stadtler, U.S. financial services industry group leader at PwC, said: "I'm not sure it's going to be layoffs; it's going to be shifts of employees. Post-Brexit, you will have more jobs in countries in the European Union and UK. The question is, where those jobs will be."
Mergers and Acquisitions
A further unanticipated after-effect of Brexit is that US banks could grow bigger, rather than smaller. They will need to expand their presence in the EU which could be done by buying a bank with all the required regulatory approvals in place.
US firms have had their key European operations headquartered in London for years, but when the Brexit is complete, US banks will have to head somewhere else which could mean acquisitions.
At a time when most large U.S. financial institutions are effectively restricted from growing much larger at home, thanks to post-crisis regulation, a PwC report suggests that they may have to engage in mergers and acquisitions in order to meet their new requirements.
Maintaining European Economic Area (EEA) passporting rights, or being allowed to continue EU operations, could require making a deal, according to the report.
Kim Betancourt, director of economics and multifamily market research with Fannie Mae, said that international investors looking to sidestep UK and EU Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term may aim to hedge against bets by investing in the United States.
Hence, a potential upside looks to be coming to the US economy and potentially to US banks, but with no formal Brexit, at least until the beginning of 2019, a big fallout is not expected any day soon.