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[...]Several senior banking executives and their advisers told the Financial Times that an early consensus was forming around a figure of about 20 per cent, or £9bn, for the amount of revenue that faces disruption in the most extreme scenario.
The executives pointed out that every firm is different, so there is a wide range of estimates of how much of each area will be disrupted by Brexit, making the task of producing an overall industry figure very difficult.
They also said many of the activities affected by Brexit could be adapted to allow them to continue in a slightly different form. One executive said EU-based customers could buy interest rate swaps or issue bonds through UK subsidiaries.
TheCityUK, the lobby group for the financial services industry, has commissioned consultants Oliver Wyman to produce a report on the potential effects of Brexit, including estimates of the impact on the sector, its customers and the UK economy.
A study in April by the group found that the UK accounted for £45bn of capital markets and investment banking revenue, of a European total of some £58bn.
More than half of the revenues the sector generated in the UK came from clients in the rest of Europe, the study found. But lawyers warn that banks are still at an early stage of calculating how much of this could be affected by Brexit.
“It is exceedingly difficult to get to the bottom of what is cross-border in law in this short space of time, let alone what could be made not cross-border with minor adjustments,” said Barney Reynolds, a lawyer at Shearman & Sterling who advises several banks on Brexit.
“I’d be cautious about the 20 per cent figure,” he added. “But clearly there will have to be some changes in service delivery techniques in a hard Brexit environment.”
City grandees are pressing the government to remember the importance to the UK economy of the financial services sector, which contributes a third of all services exported to the EU. [...]
Full article on Financial Times (subscription required)