On Monday 3 July, the Association for Financial Markets in Europe (AFME), the Boston Consulting Group (BCG) and the law firm Clifford Chance published a report examining the impact of Brexit on SMEs, large businesses and investors, more specifically regarding their relations with the financial markets and banks.
This study, which presents the vision of the end users of banking and commercial services, shows that European companies are mainly concerned about the direct repercussions of a 'hard' Brexit, such as the establishment of trade barriers or increased costs of compliance and customs duty.
“Much has been said about the challenges of a hard Brexit for banks, but that only tells half the story. The truth is that from SMEs to international businesses, companies that rely on those services are equally at risk”, Chris Bates, Partner at Clifford Chance, explained in a press release.
Concerns surrounding Brexit differ between sectors. Although SMEs and major businesses are worried about their access to credit and fear that risk management will grow more expensive, investors are concerned that Brexit will call for a renewal of documentation on existing derivative products and other commercial relationships.
80% of respondents (from the EU27 and the UK) hope that Brexit will end with similar levels of access to banking services to those currently in place. To ensure this, the report recommends maintaining acquired rights under existing contracts and setting in place an interim period during which risk transfer mechanisms would be authorised.
Despite these concerns, confidence in the European banking sector seems to persist. The report states that businesses anticipate that European banks will succeed in managing any difficulty related to the consequences of Brexit and help them during the transition period.
Speaking the same day at a conference in Brussels on the financing of the European economy post-Brexit, the Executive Director of the European Banking Federation, Wim MIjs, furthermore said that the European banking sector was engaged“, committed and creative to explore all the solutions to make [Brexit] as positive as it can be”. (Original version in French by Marion Fontana)