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English version of ˮDie Folgen des Brexit für das Investmentbanking in Europaˮ

July 2, 2018
Region:
The UK’s exit from the EU will have significant repercussions for the financial industry, notably investment banking. London as the primary European hub is likely to lose its full access to the single market. Currently, financial services exports play a major role for Britain and almost half of them go to the EU. Without the surplus it generates from providing investment banking services to EU customers, Britain’s current account deficit would be 40% higher. Following Brexit and the likely loss of the single European passport, non-EU banks will have to set up or build-out subsidiaries in the EU-27 with own capital, liquidity, corporate governance and fully-fledged operations. This could lead to an additional EUR 35-45 bn of capital being ‘ring-fenced’. This represents a further leg of banking balkanisation with trapped capital, liquidity and resources – profitability will be under pressure and not all EU business models will be viable. [more]

More documents about "Europe"

183 Documents
July 10, 2020
Region:
1
The coronavirus recession results in large-scale balance sheet changes both at euro-area and US banks. At the peak of the slump, lending to companies and corporate deposits surged further, while lending to households was much less affected. Banks also strongly increased their funding from and liquidity buffers at central banks. Within the euro area, funding from the ECB rose particularly in Germany and France, but remains much more important in Italy and Spain. Purchases of government bonds by US banks were smaller and started later than in the EMU. Over the next couple of months, corporate loans and deposits may gradually come down both in the US and Europe. Banks’ liquidity reserves at central banks are set to decrease, while their government bond holdings are expected to rise considerably. [more]
May 28, 2020
Region:
3
Commission President von der Leyen presented the long anticipated Commission proposal for a EUR 750 bn European Recovery Instrument together with an upsized EU budget for the next seven years. The plan goes beyond the Franco-German proposal that surprised markets last week. It can be expected to cause heated debates in the European Council and meet fierce resistance from frugal EU members. [more]
May 20, 2020
Region:
4
European banks have taken a substantial initial hit from the corona crisis in Q1, but so far digested it relatively well. Nevertheless, more pain is surely to come. While revenues and costs were both down only mildly, loan loss provisions shot up and almost wiped out industry profits. Capital levels dropped quarter-over-quarter, yet less than feared as banks cancelled 2019 dividends. Balance sheets expanded by a record-breaking 10% compared to year-end due to growth in corporate loans, higher liquidity reserves at central banks and increased derivatives volumes. [more]
May 4, 2020
Region:
5
During March, the first month in which the coronavirus pandemic made itself felt in Europe, banks' balance sheets grew substantially. On the one hand, euro-area banks raised enormous amounts of liquidity from the ECB, other financial corporations and non-financial companies. On the other, they just kept a large part of that at the central bank or lent it to other banks and other financial corporations. In addition, banks extended markedly more credit to non-financial firms which likewise stacked up their liquidity buffers to prepare for weaker cash flows as a result of the looming massive recession. The crisis so far had no major impact on banks’ retail business and their holdings of government bonds. [more]
April 24, 2020
Region:
6
The press statement of European Council President Michel after yesterday’s video conference of EU leaders remained vague on the EU’s joint fiscal response to the COVID-19 crisis. EU leaders endorsed their earlier agreement on the EUR 540 bn package of safety nets and also agreed “to work towards establishing a recovery fund”, asking the Commission to rapidly prepare a proposal of what this requires. Interlinking the EU's recovery plan with the budget might add another layer of complexity but could also serve as a spur for rapid agreements on both matters. [more]
April 8, 2020
Region:
7
The banking industry in Europe is entering the corona recession with strong capital levels and ample liquidity, though still only moderate profitability. Revenues will come under substantial pressure this year, loan loss provisions will jump and net income will fall materially – many banks may well make losses. However, there is likewise massive support from the public sector, with governments propping up the real economy, central banks the financial markets and supervisors relaxing rules for banks. This should mitigate the hit. Nevertheless, the risks are profound and a prolonged shutdown could even trigger a renewed banking crisis. Enormous uncertainty regarding its depth and length notwithstanding, the current crisis may well turn out more severe than the macro-financial shock scenario underlying the latest European bank stress test. Its magnitude could possibly even exceed the financial crisis and the Great Recession. [more]
April 3, 2020
Region:
9
In their fight against the spread of COVID-19 over the last weeks, EU governments introduced temporary restrictions to border traffic of various degrees ranging from border controls to outright closure. In several cases this had a severe impact on freight traffic as border controls led to tens of kilometres of traffic jam, such as between Poland and Germany. [more]
March 18, 2020
Region:
Topic:
10
The competition for global AI leadership is speeding up. But it already seems to be a two-horse race between the US and China. Europe faces an imminent risk of falling far behind if the EU and its members do not react rapidly and boldly. This could have broad implications for Europe's competitiveness, future wealth and political stability. The Commission's recently published White Paper on AI and its communication on a European strategy for data are crucial steps to formalise the debate on addressing the AI challenge in Europe. While the EU's strategy goes in the right direction, several points need to be clarified, in particular regarding the investment gap towards the US and China, finding the right balance between regulation and competitiveness of the EU's AI industry, and data access for AI research. [more]
February 28, 2020
Region:
Analyst:
11
In addition to absorbing a virus shock through the China export demand and supply chain channels, Europe now has to absorb a domestic outbreak. Voluntary steps to prevent the spread of the coronavirus (“social distancing”) as well as official containment measures are likely to disrupt economic activity. We expect disruption beyond northern Italy, an area which accounts for about 5% of euro area GDP. A temporary economic shock similar in scale to Hong Kong’s when SARS struck in 2003 would only need to occur in 10% of the euro area for area-wide GDP to stagnate in H1 and take the zone to the verge of technical recession. It is a highly fluid situation, but this might be a best case outcome. [more]
February 25, 2020
Region:
12
Last week's special Council meeting on the next EU budget 2021-2027 ended without an agreement. When EU leaders left Brussels on Friday after close to 30 hours of negotiations, there was no timeline set for further talks. In our view, it would have been a surprise if the meeting had led to a big breakthrough, given the traditionally contested nature of negotiations between net contributors and recipients of the seven-year budget. This time, the situation is much more complicated, as Brexit leaves a sizeable gap of around EUR 60-75bn in the ~EUR 1tr budget. Still, despite the meticulous preparations of Council President Charles Michel, including a marathon of bilateral meetings with EU leaders ahead of the summit and a new compromise budget proposal, not even a preliminary agreement regarding the approximate size of the Multiannual Financial Framework (MFF) could be reached. [more]
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