EU The output of the UK will shock the whole UK economy. City of London, the world’s financial center with Wall Street, should be the sector most affected. Stock market, bank stocks plunged Friday
(Boursier.com.) – The announcement of the camp’s victory Brexit has been a bombshell on global stock exchanges. The financial sector has experienced the most dramatic decline, with a dip of about 14% on average on Friday the price of bank shares.
In Paris, there has been plummeting shares large banks, BNP Paribas (-17.4%), Societe Generale (-20.6%), Credit Agricole (-14%) and Natixis (-17.1%). In London, Lloyds, Royal Bank of Scotland and Barclays have dropped 21%, 18% and 18%. In New York, the declines were somewhat less dramatic: Goldman Sachs (-7%), Bank of America (-7.4%), JP Morgan Chase (-7%) and Morgan Stanley (-10%)
the tobacco stroke was more pronounced than the prices had rebounded sharply in recent days in the hope of the victory of a “Bremain” (maintaining the UK in the EU )
thousands of jobs at risk in the City
All the big global banks have a strong presence in London. A Brexit made them fear the one hand a decline in their activities, and secondly, they will be led to relocate some of these activities to other countries in Europe or Asia if the current banking agreements with the European Union are called into question.
So in the weeks before the British referendum, several banks have indicated that if Brexit they were considering transfers to other lands that City. According to the agency ‘Bloomberg’, Morgan Stanley envisages transferring 1,000 people (about 6,000) from London to the continent. Goldman Sachs, which has 5,500 employees in London, has already threatened to transfer about 1,600 in Frankfurt or Paris. JP Morgan, had warned in June that it could remove 1,000 to 4,000 jobs over the 16,000 it has in the UK at six sites.
No panic for the boss of Societe Generale
Friday, Frederic Oudea, CEO of Societe Generale and the head of the French banking Federation (FBF), however, refused to yield to the same panic he felt, during a press conference, that the financial sector will be the most impacted by the Brexit.
in this new context, French banks could reduce their market activities and CIB (corporate banking and investment) in London and repatriate employees on the continent, according to M Oudéa. However, he added that French banks are “well prepared” and that the market reactions are “quite manageable”.
For the bank manager, French banks would even “among the least impacted” by Brexit, to the extent that they already have “two feet. a in the eurozone and UK infrastructure (buildings, iT systems …) exist for transferring employees,” which is not the case for other institutions, for which London is currently the only settlement in the European Union.
London in danger of losing his European “passport” financial
the issue is very important for banks to the extent that the threat Brexit to question two fundamental advantages of the British financial center (pending new agreements to be negotiated in a period of two years).
on one hand, the City of London could lose its European “passport”, which allows a credit institution or an authorized payment institution in a country of the European Union to operate in different countries ‘Union. If the UK lost the passport, international banks which used London as a bridgehead to work in the EU will have to be authorized on the continent …
This would be the case of the five US banks, which employ over 40,000 people in London. Taking advantage of the regime of “passporting rights”, they offer their services (mergers and acquisitions, currency trading, bonds, commodities, securities issues …) throughout the EU taking advantage of their approval of the single UK without having a significant physical presence on the continent. A presence in the EU would lead them to increased costs and the risk of a decline in their market activities.
The euro clearing houses could move
second crucial issue for the City will retain its clearing activity of euro transactions. Currently, London is hosting the clearing houses which provide the smooth running of all financial transactions in euros, making it “the” financial center of the single European currency. The Brexit reopens the debate on the location of these clearing houses, which are regulated by European banking authorities.
Still, the announced misfortunes of the financial center of London inflame the lusts of other European markets, already competing to attract banks on their territory. Experts believe that Frankfurt, Dublin and Luxembourg are in the best position before Paris.
The Place de Paris highlights its strengths
Friday, Paris Europlace agency responsible to promote the Paris financial market, issued a statement, saying that the Paris market is “ready to welcome more broadly companies wishing to strengthen their presence in the European Union.”
the square paris also asks the government “the immediate establishment of an enhanced strategy of attractiveness, including regulatory and tax …”
Frédéric Oudéa his side felt that “the Place de paris an opportunity in this case, but there are other seats. Frankfurt, Dublin, Luxembourg, “warned the president of the FBF. “London should have the means to remain an important financial center, but there will be a rebalancing, something more multipolar,” he said.
– © 2016 Boursier.com
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