...Banks may need to find $30 billion to $50 billion of additional capital to support new European units in the aftermath of a hard Brexit, according to Oliver Wyman Inc.
The extra money is equivalent to 15 percent to 30 percent of the capital that wholesale banks currently commit to the region, the management consultant said in a report published Tuesday. In addition, operating costs could rise by $1 billion as functions previously handled in London are duplicated on the continent, the company said.
A hard Brexit where banks lose privileged access to the European Union’s single market would “fragment the European wholesale-banking market,” Oliver Wyman partners including Matt Austen and Lindsey Naylor wrote in the report. “It will also make it significantly less profitable. Banks could see two percentage points knocked off their returns on equity.”
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