The chief financial officers of the three biggest US banks, JP Morgan Chase, Goldman Sachs and Citigroup, are pushing for a Brexit deal that would allow the UK to leave the EU, according to new research.
Key points:The financial industry’s chief financial officer says it is “too early” to say if the UK would be able to remain in the bloc after BrexitFinancial managers of JP Morgan, Goldman and Citibank are backing a deal for the UK that would ensure the UK is able to leave if it choosesThe Financial Services Authority has warned against Brexit taking the UK out of the EUFinancial managers have expressed concern about a Brexit which would see the UK leave the European Union.
The financial sector has been particularly vocal about Brexit, with JP Morgan and Goldman Sachs predicting a Brexit would leave the UK in “serious economic trouble” with the UK banking sector already facing severe regulatory issues.
But they have also expressed concern that Brexit could see the financial sector in the UK losing access to foreign currency markets, meaning it could be forced to devalue its currency in order to survive.
“The risk of the UK leaving the EU is much higher than any other member state,” the chief financial executives of JP, Goldman, and Citifilm wrote in a recent report.
“In the absence of a clear, comprehensive and orderly process for exiting the EU in the near term, it would be premature to assess the potential economic impact of the departure.”
The banks’ analysis, published on Thursday, says that if Brexit was to take place, the UK could still have access to the Euro and that the UK’s ability to devaluing its currency would still be “fairly robust”.
The report said the UK had “limited access” to foreign currencies and that “in the absence” of a transition period, “there is no guarantee” the UK will be able access the Euro or the US dollar.
“Given the potential for the financial markets to become less accessible to the UK following a Brexit, it is too early to predict the impact on UK financial markets if and when the UK leaves the EU,” the report said.
“However, it appears that the financial industry is far more pessimistic than it was at the start of the Brexit process.”
The report was written after the FSA warned against “sustained negative volatility” in the financial system following Brexit.
The UK’s Financial Conduct Authority (FCA) has warned that financial markets would be “more likely to react negatively” following a UK vote to leave, saying there was “no certainty” the banks could remain in place after Brexit.
Ahead of the FCA’s warning, JP said in a statement that it “would not be appropriate” to speculate on what the future of the financial services sector might be.
“As the financial landscape continues to change, we are encouraged that the FCO is taking these important and fundamental matters very seriously,” the bank said.
Goldman Sachs has also expressed concerns about the financial implications of a Brexit and the banks’ willingness to “take the necessary actions” to remain independent.
It has previously said that Brexit “would cause serious disruption to the financial stability of the entire financial system”.
“In particular, it could lead to significant negative volatility in the banking system,” the firm said in October.
The FCA said in December that it was worried about the risks of a “hard Brexit”, meaning the UK wouldn’t be able “to retain the status of a member of the European Economic Area” – the single market which provides free trade between the 28 member states.
“It is not unreasonable to anticipate that the banking sector could experience significant negative market impacts,” the regulator said.