Brexit going real…

Draghi (ECB) and Carney (BoE) meeting for a Friday cup of tea? Why not, as there is really lots at stake. Don’t even forget about EUR clearing still taking place in London and not in Frankfurt or Paris what would many think.

As Brussels is putting more and more pressure on UK politicians to assume the full responsibility and start the exit talks immediately, the London’s City bankers are already firing at all cylinders in the field of lobbying. Well, losing the access to EU markets, especially for US banks would be very costly for years to come. The solution is a pass-porting but would Germans or French be even open to talk about it? 

So, where should London bankers find a refuge? Frankfurt is a first choice as there is ECB and strong pressure to bring EUR clearing there, then Dublin due to language, low taxes…etc. may be of interest, and definitely, Paris is also a place to go. What we may be a bit worried about is that the part of the business will end up in New York, in the light of a safe harbor kind of place with stable legal framework and predictability that is vital for top executives while making long term decisions.

Well, the period of uncertainty is coming as UK and EU would need to agree on divorce papers first, sign them and negotiate the new after-marriage deals, what in my believe will be very messy with unpredictable outcome.

In all of that market turmoil do no forget about lots of financial institutions still holding peripheral bonds on their books that are under pressure in “fleeing to safety” flows or Deutsche Borse – London Stock Exchange merger being questioned a lot. Maybe if Frankfurt is a HQ place for the group, the German regulator can approve it. The deal in this case will be questioned by LSE shareholders what for sure, will put an additional question marks about the deal.


What’s next for the EU ?

Monday through Wednesday – expecting busy calendar for EU leaders, Draghi…etc., that will be topped with EU Summit where Cameron would have a time to explain a lot. The second part of EU Summit will take place without his presence. Actually, there is no point at this time to speculate about the outcome as the situation is very fluid and evolving…