UK Banks Poised To Lose Corporate Customers In Wake Of Brexit

Everyone was bracing for a negative impact from Britain’s historic vote earlier this summer to exit the European Union, and now, a new report from Greenwich Associates shows just how bad it may be.

According to a report looking at the new research from Greenwich Associates, U.K. banks could be poised to lose a number of European and U.K. corporate customers. The research found that around 40 percent of European companies and close to 25 percent of U.K. companies already have or are gearing up to reallocate their banking business elsewhere because of Brexit. Some of the corporate customers are moving their business to bigger global banks and away from U.K. ones.

“Since the vote, the biggest winners are the global banks, with 20 percent of continental corporates planning to increase business with these banks and U.K. corporates staying net neutral,” Tobias Miarka, the Greenwich managing director who wrote the study, said in the report.

Greenwich also found a third of big European companies surveyed by the firm said they expected the short-term impact from Brexit to be negative or very negative. Over the longer term, the view was worse, with 45 percent thinking Brexit will have a negative or very negative impact over the long haul. “These fears are prompting companies to seek out ways to protect their businesses,” the firm said.

The report also found close to half of large British companies surveyed and about one in three European companies said their currency and interest rate hedging strategies with foreign exposure were the top concern in the short term. Ever since British citizens voted in favor of exiting the European Union, concerns have abounded about the impact it will have. In early July, the sterling fell to a 31-year low against the dollar due to those concerns.