A two-day referendum on Britain leaving the European Union, the major US banks are preparing for a catastrophic scenario that could cost them billions of dollars.
Given the volatile environment that prevails in Britain, outward appearances banks hold. “We have it totally under control,” said Michael DuVally, a spokesman for Goldman Sachs (NYSE: GS-PB – news), to a question about how he is preparing his bank for the possibility that the pro-output in Britain wins the referendum on Thursday
the answers of Morgan Stanley (Xetra: 885836 – news) and Bank of America (Swiss: BAC.SW – news). are identical. However, in the offices of Wall Street lawyers banks working almost on alert, evaluating each option, according to sources in the banking sector who prefer to speak on condition of anonymity.
Voting it could severely affect the City of London, where US banks do most of their business in the 28 countries of the European Union.
If realized the ‘brexit’, Britain will lose the advantage of being able to do business freely with the countries of the European Union, which means that banks can no longer handle all their business transactions bag , loans and other activities in EU countries from London.
As demonstrated in the recent British elections, which opinion polls are unreliable, banks do not trust any of these results or lead out surveys themselves.
instead, they are warning their stockbrokers to prepare for a long and hectic day of trading in the financial markets during the day of the referendum and the next day.
JPMorgan Chase (Swiss: JPM.SW – news) and has hotel rooms reserved for its operators near their offices. Several banks confirmed they have created centers of telephone care services to communicate with their customers.
“Thursday will be a busy day. We hope that large transactions are made,” says a banker.
“. Our customers are concerned about what will happen to the pound Forex (the global foreign exchange market) is the biggest concern,” adds
-. Trim in London –
the five major US banks employ more than 40,000 people in London, more than in the rest of Europe.
they use regulation that allows bankers to offer their services-from advising mergers and acquisitions to manage capital , loans and operations- throughout the EU without physical representation in any of the other countries of the union.
a departure from Britain of the EU “could be a negative for US universal banks as costs increase and activity of the capital market would lose in intensity, “recently wrote an analyst at investment bank KBW in a report, which ensures that banks face significant challenges over the next two years, regarding costs and inputs .
“We believe the ‘brexit’ would be the worst for stocks and companies related to the EU and Britain, as this may cause fears of contagion and a brake on growth,” he noted report.
some sources claim that US banks have already studied the possibility of opening offices in Amsterdam, Dublin, Frankfurt and Paris.
However, some of them already have small subsidiaries on the continent that could enlarge. Citigroup (NYSE: C – news) has an in Dublin and JPMorgan has offices in Frankfurt and Luxembourg
The CEO of JPMorgan, Jamie Dimon, said in early June that the bank could be forced to. cut up to 25% of its staff of 16,000 employees in Britain if he wins the ‘brexit’ in the referendum.
Goldman Sachs could transfer a quarter of its staff of 6,500 employees London outside Britain and Morgan Stanley to 1,000 of its 6,000 employees to other points in Europe, according to a source.
Any reorganization of this kind would mean an increase in costs. Thus, KBW estimated that Morgan Stanley might lose 9% of their income in two years (Other OTC: UBGXF – news).
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