The implications of Brexit for financial services organisations
The new Brexit reality...
Although it only recently became clear that the British people had voted to leave the EU, the implications of that decision are already being felt in the financial markets and the financial services industry.
All businesses operating in the financial services industry need to evaluate the implications of the decision on their business and future strategy. Perhaps more urgently, as the shockwaves of the decision are being felt across UK and EU financial markets, the impact on capital and liquidity needs to be quickly addressed.
Brexit in the short term
An immediate concern for companies will be whether they continue to meet capital and liquidity requirements. Have key warning indicators been breached and do contingency plans need to be enacted? Boards need to assess the impact on their strategies. Are disclosures required to the regulators/public and do you need to apply to the regulator for waivers because of technical breaches of regulations?
Boards need to act quickly and decisively to minimise the impact of this volatility on the business and to remain compliant with regulatory requirements.
Brexit in the medium term
We do not yet know what the process will be for extracting the UK from the EU and the implications that might have for their trading relationship with the rest of the EU. In the medium term, the loss of the EU passport is likely to have the single biggest impact on the UK financial services industry. It may require UK firms to set up permanent establishments in other countries within the EU, Ireland being an obvious choice amongst others. The details are not clear at the moment, but what is clear is that all firms affected need to start planning so that they can react quickly to the changes ahead.
The long term view
The full ramifications of this decision on the financial services industry both in the UK and the wider EU are still to be understood. Can the UK retain its place in the financial services industry outside of the EU and perhaps more importantly, will the EU continue in its current form? Will the UK make changes to the key European Directives driving their current regulatory agenda? As the answers to these questions emerge, the UK financial services industry will need to adapt and reform quickly.
How can we support you?
Mazars will be working closely with our clients in the coming weeks and months to determine the precise implications of the vote for their business through this period of change. Please get in touch if you would like to discuss any of the implications of Brexit.
Brexit – potential impact for Ireland
In what is being described as “uncharted waters”, a period of “turmoil and uncertainty” generally for the UK and the rest of the EU and “of economic uncertainty for Ireland”, the UK will cease to be a member of the EU following the narrow “victory” for the leave campaign.
US Protectionism Bigger Risk than Brexit
The risk to Foreign Direct Investment posed by US protectionism is a bigger risk to the Irish economy than Brexit and EU Tax Challenges, warned Mark Kennedy, managing partner, Mazars, one of Ireland’s largest accounting firms.