Bank and political turmoil
After the British referendum ended, the specific issues of Brexit were not smooth. On January 15, 2019, the "Brexit" agreement between the British government and the European Union was rejected by the lower house of the British Parliament. The date of the original "Brexit" date of March 29 is now very close. The volatility it brings to the financial market has not stopped. How can the banking industry survive the political changes of Brexit?
First, large-scale cross-border transactions between UK and EU companies, the UK exits the EU, and transactions between commodities are sure to be affected by trade barriers. The cost of cross-border transactions will rise. In addition, in the process of goods circulation, because it is not in the EU when dealing with other European countries, the need to comply with different regulatory systems will add extra costs to the bank, which may make it difficult for British banks to compete with European counterparts.
Second, the impact of the City of London. Once the UK leaves the EU, banks may lose the “passport rights” that “allow them to sell their services freely in the EU”. This has caused many industry workers and operations to move outside the UK to ensure they have subsidiaries in other EU countries to cope with the post-Brexit market. https://www.ig.com/uk/news-and-trade-ideas/shares-news/brexit-and-uk-banks--what-would-no-deal-mean---181119
Whatmore, the attractiveness of the corresponding London financial centre will be affected by political changes, as it reduces the availability of technology and the flexibility of the labour market to some extent. The government needs to think about how to keep the London financial centre attractive.https://www.cnbc.com/2018/11/28/bank-of-england-2018-uk-bank-stress-tests-and-brexit-report-published.html
The brain drain, the bank cost increase, the bank supervision system and so on. These have put pressure on banks. In October 2018, the Royal Bank of Scotland announced that in order to solve the economic uncertainty, 100 million pounds ($128 million) has been prepared for impairment. Barclays and Lloyds are also under pressure. Perhaps British Banks can learn from HSBC, whose support for Asian markets has reduced its dependence on European markets and is naturally less affected by the politics of Brexit.https://www.ig.com/uk/news-and-trade-ideas/shares-news/is-it-time-to-look-at-uk-banks--180808
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