04 July 2016

フィナンシャルタイムズ紙：英国のEU（欧州連合）離脱による外銀への9つの影響

Brexit will change overseas banks significantly, sometimes for the good. Here are nine ways the vote will affect them.

1) Uncertainty over business model hurts in the short term

Overseas banks currently base themselves in London and ‘passport’ in to the other 27 EU member countries. Now they are facing months, if not years, of uncertainty over whether they will need to get new EU banking licences. They’re also waiting to discover whether euro clearing will move from London to Frankfurt or Paris. The confusion creates new expenses for contingency planning and, potentially, for relocation.

2) Relocation could cut costs in the longer term

Brexit is expected to reduce the number of bank staff working in London and could accelerate plans to shift some operations to cheaper locations — a process many banks already begun. “Longer-term, US banks could benefit given high costs in London,” says Mike Mayo, a New York-based analyst at CLSA. He cautions that some functions could end up being duplicated in London and in the EU, which would reduce savings.

3) Trading revenue up in the short term

Banks enjoyed record trading volumes in the immediate aftermath of Brexit, with executives reporting up to 10 times ‘normal’ trading levels on June 24. That means 10 times normal commissions. But analysts at Citi warned: “Any boost from client trading income could potentially be offset by inventory losses” if banks were holding assets that fell in value.

4) Trading revenue down in the long term

Over the coming months, analysts see trading revenues falling, as uncertainty about the terms of the UK’s exit drives volatility, and investors sit on the sidelines. This will hit investment banks with large markets businesses.

A vote to Remain in the EU was forecast to trigger a flurry of corporate activity that would help banks recover from a dismal first half of 2016, when investment banking fees fell 23 per cent. Instead, a Leave vote is expected to dampen dealmaking. Analysts from Citi noted, the “heightened economic, political and market uncertainty … together with the associated market volatility, is likely to greatly reduce the number of deals and transactions”.

6) Rates lower for longer

A long-awaited interest rate rise by either the Fed or the ECB seemsfurther away than ever in the aftermath of the Brexit vote. Analysts from RBC wrote that they now believe rates could remain “static through the second half of 2016 and most of 2017” thanks to the “heightened level of uncertainty and fragility”. Banks make less money when interest rates are low, because the gap between what they pay for funding and what they charge for loans narrows.

7) Less profitable UK subsidiaries and branches

After the Brexit vote, Morgan Stanley cut its 2018 earnings forecasts for UK banks by 12 to 27 per cent because of the “macro implications” of the Brexit vote. The hit is twofold: lower loan growth as the economy slows, and higher loan losses. Overseas banks with big UK businesses will suffer the same pain. Santander made 23 per cent of its underlying profit in the UK last year, more than in Spain or Brazil.

8) Less valuable UK earnings thanks to weak sterling

The dramatic fall in sterling means that overseas banks will get less benefit for any profits that they do earn in the UK. Santander’s first-quarter earnings were already showing the impact: group-wide earnings fell 5 per cent on a reported basis but they were up 8 per cent once the fall in the Brazilian real and pound were stripped out. Since then the pound has fallen further against the euro and the dollar.

9) Relative strength of US banks improves versus Europeans

For the past few years, US investment banks have grown at the expense of their European rivals. Some analysts believe that Brexit will see the titans of Wall Street extend their lead. “The biggest US banks will have an epic market share opportunity versus weaker European banks,” says CLSA’s Mr Mayo. “For all the extra cost and complexity for US banks, they can still benefit proportionately.”

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