Britain’s vote to leave the European Union will probably reduce global investment banks’ revenue by about $8bn and could push securities firms to exit some trading businesses, according to a report by the Boston Consulting Group.
Bloomberg News reports that revenue from mergers and acquisitions advice, equity underwriting, bond sales and securities trading is forecast to fall to about $204bn in 2016 from $228bn a year ago, the consulting firm wrote in a research report published on Friday. The estimate was revised down from $212bn as a direct consequence of Brexit, which has the potential to cut M&A fees in the European region by as much as 60%.
Brexit has plunged global businesses into the dark over the U.K.’s future relationship with the world’s largest trading bloc, threatening their plans to grow or acquire other companies. Facing high costs of moving some trading units to other EU nations, banks that are already struggling in those areas may choose to bow out instead, the report said.
“For some banks, Brexit could accelerate their withdrawal,” the authors led by Philippe Morel wrote in the report. “Brexit will likely affect both the short-term revenue outlook, through market shocks and loss of business confidence, and the long-term revenue outlook through disruptive business transformation.”
To access the complete Bloomberg News article hit the link below: