Wealth and asset management firms the most vocal and active sector in financial services post Brexit

27 July 2016

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  • 60% of wealth and asset managers have spoken out on the impact of Brexit on their business, compared to 48% of insurers and 44% of investment banks respectively
  • 46% of the asset management firms* to have announced changes to their business  are considering launching new products
  • Only 3% of financial services firms have raised questions over their global or European domicile

One month on from the EU referendum, wealth and asset management firms have been the most vocal firms in the City regarding the impact of Brexit on their businesses, with 60% making public pronouncements since 24 June.  By comparison, 48% and 44% of insurers and investment banks have voiced their thoughts on how the ‘leave’ vote will affect them.

Of the largest asset management firms* that have announced changes to their business in response to the referendum result, 46% are considering launching new products and 47% have either gated property funds or raised redemption fees.

The findings are derived from EY’s Financial Services Brexit Tracker, a real-time analytics tool which aggregates all public corporate announcements related to Brexit made by the largest banks, insurers, wealth and asset managers, private equity firms and FinTech companies operating in the UK.

Only 3% of the largest financial services firms that have operations in the UK have made public soundings that they may relocate operations, analysis by EY’s Financial Services practice has found. By comparison, 7% have reaffirmed their commitment to the UK.

Commenting on the findings, Omar Ali, UK Financial Services Leader at EY, says: “The vote for the UK to leave the European Union has introduced uncertainty for the financial services sector but, as the results of the tracker show, no-one is making rash decisions. Our experience is it's very much business as usual for our clients until there is more clarity on the terms that will be on the table.

“As expected, the changes to the economic outlook have prompted Asset Managers and Life Insurers into some action, but for the most part businesses are waiting for the negotiations to start in earnest before they make any big decisions. The lack of public announcements does not, however, mean the sector is not reacting.  Across financial services work continues on the contingency and scenario plans that had been drawn up in advance of the referendum, and in particular preparing for the second order consequences of the referendum notably a slowing economy and the potential of lower interest rates for longer."

Insurers are on the front foot

Nearly a fifth of the largest insurance companies operating in the UK** (18%) have cited possible changes to their business or products, with well over half (57%) of life insurers announcing an annuity rate cut. Of the 10 largest overseas insurance companies active in the UK, two reaffirmed their commitment to the UK and one indicated that some operations could be moved.

Furthermore, three large insurers (8% of the sample)  have highlighted short and long-term opportunities from Brexit, being either generally positive about their long-term prospects operating within the UK or indicating that Brexit would have a “soft landing” and that the UK and EU could come to an advantageous and co-operative trade agreement.

Investment banks are watching and waiting

The top 20 investment banks in the UK*** have remained broadly neutral since the result. 40% have expressed a view on the likely financial impact of Brexit on their company, with half of those institutions expressing a neutral stance and only 15% saying the impact will be negative. 45% have made commitments relating to staff and only 15% have indicated probable relocation or cuts.

Omar Ali adds: “All in all confidence in UK financial services remains high. There are a number of views across the City about how the negotiations may play out. Most are hopeful that the industry will maintain access to the single market and all the strong regulatory work completed over the past few years will help us to agree equivalence. In reality, while businesses are considering their options for certain elements of their operations, there isn’t one location that is the logical alternative to London or one single location that has capacity to absorb the City and so for now the majority are continuing with prepare but wait and see approach with a continued focus on serving their clients.”

ENDS

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