UK banks likely to get hit hardest after Brexit vote

A sense of panic has taken over London’s financial center after the U.K. voted to leave the European Union.

The city is the undisputed financial capital of Europe, but that status is now clearly in doubt.

Many global banks use Britain as a springboard for their business throughout the EU. Banks that set up business in one EU country can automatically operate across the entire bloc, without having to apply for additional permits.

Leaving the union may disrupt this link, with some high-profile EU officials already calling the so-called “passporting rights” of U.K. banks into question.

There’s another problem: Much of the global trade in euros takes place in London, despite the U.K. opting out of the currency used by 19 members of the EU. The city handles transactions worth trillions of euros — currencies, shares, bonds and other financial contracts.

Britain went to court last year to stop the European Central Bank forcing some of that business to take place in the eurozone. The bank and EU leaders may now try again to correct what they see as an anomaly.

Dutch finance minister Jeroen Dijsselbloem, a key euro official, said losing full access to the rest of Europe would be the “price” Britain would pay for Brexit. Speaking to Dutch TV station RTL on Friday, Dijsselbloem said rival financial centers like Amsterdam and Frankfurt would benefit.

The governor of the Bank of France also questioned London’s future as the financial capital of Europe.

“If tomorrow, Britain is not part of the internal market, the City cannot keep its European passport,” Villeroy de Galhau told a French radio station on Saturday, using the moniker for London’s financial district. He heads the French central bank and is a member of European Central Bank’s governing council.
Dutch finance minister Jeroen Dijsselbloem, a key euro official, said losing full access to the rest of Europe would be the “price” Britain would pay for Brexit. Speaking to Dutch TV station RTL on Friday, Dijsselbloem said rival financial centers like Amsterdam and Frankfurt would benefit.

The governor of the Bank of France also questioned London’s future as the financial capital of Europe.

“If tomorrow, Britain is not part of the internal market, the City cannot keep its European passport,” Villeroy de Galhau told a French radio station on Saturday, using the moniker for London’s financial district. He heads the French central bank and is a member of European Central Bank’s governing council.