Expand / The fall in GDP would damage the quality of its assets and profits for its retail banking activities in the UK.
There are just days for UK decide whether to stay in the EU. The rhythm of the countdown, the fear that decides separate spreads like wildfire through the markets and financial systems, while appeals succeed against Brexit of authorities, politicians and businessmen, both European and British.
the phantom of the split looms over British banks in the form of higher financing costs, structural changes in investment banks and a deterioration in asset quality due to the fall in GDP, which would undermine their benefits. But the latter is also a threat to European entities with business on the island.
Santander and Sabadell listed, along with HSBC and Bank of Ireland, between the four European banks that would be most affected in their activities retail banking for the deterioration of the economy if the UK decides to separate from the EU in the referendum of June 23, according to estimates by analyst firm JPMorgan.
in the shorter term, Brexit Santander and Sabadell would impact through the depreciation of the pound sterling and the fall of its shares on the stock exchange. Their ratings “could be significantly affected” if the secessionists are imposed. US firm points out, however, that institutions with businesses in UK could emerge stronger if it comes out victorious permanence.
Today, the bank presiding Ana Botin has 29% of its assets in the UK, which is the geography that contributes most to benefit the group, ahead of Brazil -motor their results in the worst years of the financial crisis and Spain. The assets in the UK market bank headed by Josep Oliu account for 21% of the total after the acquisition of TSB.
The exhibition of the two Spanish banks to UK does not reach the HSBC and Bank of Ireland , 36% of assets in both cases, but far exceeds that of other major European banks with a presence in the country, as Handelsbanken (9%), BNP (6%), Deutsche Bank (5%), Credit Suisse (5%), UBS (4%) and Danske (4%).
as the number of employees, Sabadell leads the ranking with 31% of its staff on the island, while Santander deals fifth place, with 13% of the total: JPMorgan notes that the Brexit could lead institutions to mobilize jobs outside the country, which would require significant restructuring in the case of Spanish banks
. the most recent polls show an increasing weight of votes in favor of leaving UK EU to the point of overcoming supporters of permanence, but analyst firm bet that the latter will prevail in the vote thanks to the undecided end up leaning toward her.
the ECB is prepared with this backdrop, the ECB takes steps to mitigate the effects of an eventual break. The only mechanism Supervision (MUS) and addresses contingency plans with each of the banks concerned, as confirmed on Tuesday its president, Danièle Nouy, in his appearance before the European Parliament.
CEO Sabadell, Jaime Guardiola, as he said in early March that the only supervisor of the eurozone studied with entities impact analyzes this hypothesis. The Brexit ‘said the banker would not be a great risk to its business structure in the UK.
“Our activity is pure retailer. Whatever happens, there will be need to serve individuals and SMEs” , which involves “less risk” that the wholesale or large corporate business, “before a negative environment,” Guardiola said when presenting the results of the first quarter.
Meanwhile, CEO of Santander Jose Antonio Alvarez, said in his presentation that the Brexit would have a first negative effect on currencies, on the pound sterling and the euro, to impact longer term on the economy, both in the UK and the eurozone.
in addition to the contingency plan for the Brexit, Santander made other plans regularly, especially to address liquidity pressures with impact on ordinary business, he said referring to the roadmap to secession UK and the possible transfer of the workforce in the country to Germany. Separation “negatively affects both parties, I hope that in the end remain,” he said.
In parallel to MUS, the institution headed by Mario Draghi will coordinate with the Bank of England to inject all the liquidity necessary the day after the referendum if the UK is independent of Europe, according to Reuters, citing sources Frankfurt-based agency: Whatever it Takes is another to ensure financial stability. While this obviously is not the only thing at stake.
Less growth “Without UK, the EU will be poorer, smaller, less influential and possibly less stable,” summarizes the rating agency DBRS. If you exit the Brexit not rule out a downward revision of credit ratings of several European states, especially the most indebted countries, including Spain mentions.
The British -aventura- secession will result in less growth in the whole of Europe: regulatory uncertainty would depress both trade with UK as the country’s investment on the mainland and vice versa. In addition, the Brexit could become the trigger for other separatist movements in Europe and new referenda
Brexit. Santander and Sabadell, among the four most affected European banks
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