Finance chiefs including the boss of state-backed lender Royal Bank of Scotland have warned that government infighting has left the UK “sleepwalking” towards a no-deal Brexit that would severely disrupt the financial services sector.
Ross McEwan, RBS chief executive, told the Financial Times: “Politics has got to be put aside. This is a crucial time for this country and we just seem to be sleepwalking into something because everybody wants to have a scrap over leadership or their own views”.
“Politicians need to do what’s right for this country and start focusing on what deal they want out of it collectively. Whether it’s Chequers [or something else], just get people behind something”, he added.
Mr McEwan’s vocal criticism of his bank’s largest shareholder — the government still holds more than 60 per cent of RBS shares after rescuing it in 2008 — highlights the extent of frustration among industry leaders as banks struggle to plan ahead for after the UK leaves the bloc next March.
Prime Minister Theresa May’s negotiating team appeared to have made progress in negotiations with counterparts in Brussels ahead of a summit this week, but opposition within her Conservative party and the Democratic Unionist party that props up her government has threatened to derail efforts.
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Several senior industry figures privately echoed Mr McEwan’s concerns about securing parliamentary backing for an exit deal. One said: “Is there a general sense of frustration? Categorically yes. Financial firms can handle most sorts of environment, if only they know what it’s actually going to be.”
“The rest of Westminster needs to get behind [the prime minister] so she can go and negotiate a deal in the knowledge it will be able to get through parliament”, the person added.
Stephen Jones, chief executive of UK Finance, a trade group for financial services companies, pointed to questions surrounding the continuity of contracts and the transfer of personal data as key “cliff-edge” issues that still needed to be worked out, and suggested negotiators on both sides needed to do more.
“Decision makers in the EU should treat these critical business disruption issues with urgency, given the potential macroeconomic hit for both sides if adequate solutions are not found in good time”, he said.
Many banks with international operations have already made plans to move staff or operations to deal with any regulatory disruption, but the threat of exiting without a deal has also raised the stakes for domestically focused companies, many of which fear an economic shock that could hit property prices and increase unemployment.
Rating agency Standard & Poor’s said last week that a disorderly Brexit would prompt mass credit rating downgrades for UK banks, which could exacerbate any difficulties by driving up funding costs.
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An executive at another high street bank said there was “a concern that this opens the door for [Jeremy] Corbyn, which is even more of a concern”. The Labour leader has pledged radical reform if he wins the next general election, and has previously described himself as a “threat” to big banks.
Some within the industry remained more sanguine. The head of one British bank said: “This is basically standard practice for EU negotiations; they were never going to agree something in the summer.”
In the meantime, Mr McEwan said RBS would “plan for the worst”, adding: “We’re going to keep great capital and great levels of liquidity so whatever comes we will be in a shape to take it . . . Because we don’t know what we’re going to have to fund in six months’ time because we don’t know the environment we’re heading into.”
Source : https://www.ft.com/content/b8eb983a-cf88-11e8-a9f2-7574db66bcd5Thank You for Visiting My Website Check Out Our New Products !