Brexit uncertainty is leading almost 40 per cent of continental companies and a quarter of UK companies to shift their banking business, as firms look to insulate them from potentially negative impacts of the EU referendum result.
UK banks are suffering most as 28 per cent of corporates domiciled on the Continent say they plan to reduce their business with UK banks, according to a report out today from Greenwich Associates. EU non-UK regional and local banks can expect a slight increase in business with 14 per cent of UK corporates planning to expand their business with them.
But the biggest winners since the vote are the global banks, with 20 per cent of continental corporates planning to increase business with them and UK corporates staying net neutral, says the report called The Post-Brexit Hangover.
The report concludes that European companies are worried the UK’s exit from the EU will harm their businesses and are looking for ways to insulate themselves from Brexit’s possible negative consequences.
More than a third of large European companies interviewed by Greenwich Associates as part of a most recent Post-Brexit study expect the short-term impact of Brexit to be negative or very negative. Their long-term outlook is even more negative, with 45 per cent of continental corporates believing Brexit will have a negative or very negative long-term impact, a view shared by almost 30 per cent of their UK counterparts.
Corporates are rethinking hedging strategies, with 49 per cent of large UK corporates interviewed and nearly 1 in 3 companies on the Continent having revisited their FX and interest rate hedging strategies since the vote.
Study participants cite FX exposure as the number one short-term topic on which they are seeking external guidance. Next to hedging, corporates are focused on cash management—especially on the Continent, where the Brexit vote has already triggered 13 per cent of study participants to review their lists of UK/Europe cash management providers.
Greenwich Associates managing director Dr Tobias Miarka says: “While the politicians are still debating what actually occurred in June and what the result means for the future, business leaders do not have the luxury to wait and see.
“They are directly exposed to the effects of the Brexit vote from day one, with no opportunity to hide.”