Britain’s decision to leave the European Union will probably curtail finance industry revenue, including in investment banking, as companies worried about the economic aftermath are likely to hold off takeovers and share sales, according to Deutsche Bank.
“The external market environment has deteriorated for everyone” since the June 23 referendum, said Alasdair Warren, who leads the company’s corporate and investment banking unit in Europe, the Middle East and Africa. “No one in financial services benefits. The consequence is a smaller fee pool.”
Bloomberg News reports that analysts on both sides of the Atlantic have cut earnings estimates for the biggest investment banks on expectations that Brexit-linked economic uncertainty and currency swings will deter securities sales and major deals. That could frustrate efforts by Deutsche Bank and other European lenders to cut costs, raise capital levels and trim their focus on costly debt-trading businesses.
“It’s not a rosy picture, but we are well-positioned and our relative share of the available fee pie will probably rise,’’ Warren said. “A decision by the U.K. to leave the European Union could take a lot longer than two years to implement. That will mean a lot of uncertainty.”
To access the complete Bloomberg News article hit the link below: