Europe’s car industry has suffered its largest drop in sales since records began, stemming from the impact of the COVID-19 pandemic.
New data published on Tuesday by the European Automobile Manufacturers Association (ACAE) showed that new car registrations in the European Union fell by 23.7% in 2020, the sharpest annual decline ever seen by the industry body. 3 million fewer cars were produced than in 2019, and only 9.9 million new car registrations were recorded in the bloc.
According to the ACAE, the decline is owed to the COVID-19 pandemic and its disruption of car assembly lines and consumer demand.
“Containment measures – including full-scale lockdowns and other restrictions throughout the year – had an unprecedented impact on car sales across the European Union,” the organisation said.
Every one of the EU’s 27 member states saw double-digit sales falls during 2020, according to the ACEA’s figures. The greatest fall was in Spain, with a decline of 32.3%, followed by Italy at 27.9%. Sales in France and Germany also dropped by 25% and 19% respectively.
The worst Europe-wide slump was felt in March and April, when COVID-19 made its initial impact on Europe and the first lockdown restrictions were put in place. However, sales have remained weak since then.
New car registrations dropped by 76.3% across the EU in April as these first lockdowns were established.
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New registrations also fell by 3.3% in December, marking the third monthly decline in a row, as new lockdowns have been imposed in European nations.
The car industry represents 7% of the EU’s GDP and employs almost 15 million people directly and indirectly, the ACEA said.
Nearly €6 billion of EU share dealing was moved away from London on Monday as the effects of Brexit compelled equities trading to shift to EU cities, the Financial Times reported.
Trading in equities for the likes of Deutsche Bank, Santander and Total moved to exchanges in mainland capitals – primarily Madrid, Paris and Frankfurt. London’s Euro-dominated share trading hubs, including Cboe Europe, Aquis Exchange and Turquoise, shifted to newly established venues in the EU. The volume amounted to about a sixth of all equity business on European exchanges on Monday.
The change came abruptly for London investors, who were previously able to trade shares in Europe across borders without restrictions. Now, EU-based banks and asset managers will be required to use a platform inside the bloc for Euro share trading.
The shift in equity trading is far from the only effect that Brexit is set to have on London markets. The Brexit deal agreed before Christmas does not cover financial market access, with EU regulators refusing to recognise the bulk of the UK’s regulatory systems as “equivalent” to its own.
Temporary measures were put in place before the exit to allow UK financial firms to use venues in the EU.
“The FCA continues to view the agreement of mutual equivalence between the UK and EU as the best way to avoid disruption for market participants and avoid fragmentation of liquidity in DTO products,” the FCA said, adding that it will consider by 31 March “whether market or regulatory developments warrant a review of our approach.”
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Also on Monday, EU regulators withdrew the registration of six UK-based credit rating agencies and four UK trade repositories, compelling EU companies to use EU-based entities for information on derivatives and securities financing trades.
The value of the pound sank precipitously on Friday, falling by more than 1% against the euro and the dollar after UK prime minister Boris Johnson’s warning on Thursday that a no-deal Brexit remained a “strong possibility”.
Sterling fell 1.3% against the euro to €1.089 and against the dollar to $1.3204 in early London trading.
The pound has been under continuous pressure since Wednesday, when Johnson and European Commission president Ursula von der Leyen confirmed that “significant differences” were yet to be bridged after trade negotiations in Brussels.
The UK and EU are currently deadlocked over questions of their post-Brexit relationship, with main sticking points including competition rules and fishing rights in UK waters. The two sides have set a deadline of Sunday to reach an agreement and prevent a “no-deal” scenario that would likely cause economic chaos.
"We need to be very, very clear there's now a strong possibility that we will have a solution that's much more like an Australian relationship with the EU, than a Canadian relationship with the EU," Johnson said. Unlike Canada, Australia does not have a comprehensive trade deal with the EU, and most of its trade is subject to tariffs.
However, the UK as a nation conducts far more trade with the EU – around 47% of its overall trade compared with Australia’s 15%.
“With the UK now looking like it’s hurtling towards a no-deal Brexit, investors should adopt the brace position for swings in sterling and shares in domestic focused companies,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
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Whether or not a deal is achieved, the UK’s temporary trade arrangements with the EU will expire on 31 December.
A surge of freight volumes has caused gridlock in UK ports, and the government has been warned by port operators that further disruption could be on the way once new Brexit checks come into force.
Felixstowe, the UK’s biggest deep-sea port that handles 40% of the country’s container trade, has been handling around 30% more goods than usual as businesses have rushed to replenish stock after the end of the recent England-wide lockdown and ahead of the final days of the Brexit transition period. The disruption has also been felt in other major ports including Southampton and London Gateway, impacting several industries.
Shortages of essential products like washing machines and fridges have been reported by several high street retail chains. Builders are also running short on tools and supplies, with Builders Merchants Federation CEO John Newcomb describing the ports as a “major issue” for members.
“There appears to be an increasing issue getting products through ports,” Newcomb said. “Rather than taking a maximum of one week to unload, it is taking up to four.”
Elsewhere, Honda was forced to close its 370-acre factory in Swindon – its largest plant in Europe – which operates a “just in time” manufacturing supply chain. As the punctual arrival of goods is essential to the continuity of its production line, congestion at ports left the factory unable to function.
From 1 January, UK exporters and lorries will be subject to new checks on agricultural and animal products at EU ports, which logistics industry heads fear will disrupt mainland imports. Equally concerning are the health and safety checks that the UK plans to impose on EU imports, including food, potentially causing shortages.
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In a letter to cabinet office minister Michael Gove in November, British Ports Association CEO Richard Ballantyne warned of a “severe impact” on trade and essential supplies.
“Some ports are being told by customers that these volumes of interventions could ‘kill off’ particular trades,” Ballantyne wrote, raising fresh-cut flowers and salad and meat supplies for supermarkets as some of the most at-risk areas.
Paul Marcantonio, Executive Director for the UK & Western Europe at ECOMMPAY, offers Finance Monthly his predictions for open banking and the fintech sector in 2021.
The UK leads the charge in open banking; 2019 bore witness to a surge of growth in the country’s open banking ecosystem, when UK open banking hit one million users, regulated providers hit 204 and there were 1.25 billion API calls. It is evident that open banking has played a significant role in consolidating London’s place as a global leader in the fintech industry, comparable only to New York. With Brexit looming, there are many unknowns on the road ahead for UK businesses and their ability to deliver open banking services to the wider EU market after 31 December. Will open banking be affected by Brexit? And what is the outlook for the UK fintech sector in the new year?
The Brexit effect
Many companies are worried about maintaining the smooth digital experience that the modern consumer now prioritises post-Brexit. Looking ahead, UK businesses will lose their ‘passporting’ rights to do business across the EU, with organisations in the EU suffering similar barriers when seeking to operate in the UK. To overcome this barrier, many firms have created bases in the EU, while companies are also applying to the FCA for temporary permission to operate in the UK.
In order to minimise the disruption to open banking services post-Brexit, the FCA has said that third-party providers (TPPs) will be able to use an alternative to eIDAS certificates to access customer account information from account providers, or to initiate payments. eIDAS certificates of UK TPPs will be revoked when the transition period ends on 31 December. This means that TPPs have a compliant way to access customer information and ensures any changes as the UK leaves the EU will be smooth.
Businesses are having to audit their suppliers, as well as their payment service providers, to ensure they have all the necessary licenses to operate in the EU. Many companies are also building separate EU entities so that they can function in the EU under any Brexit agreement.
Many companies are worried about maintaining the smooth digital experience that the modern consumer now prioritises post-Brexit.
EU regulations
The role of open banking will only increase after Brexit, since the open banking agenda cannot be achieved by existing major banks. Open banking allows banking services to digitise so that consumers gain access to more choice than ever before, and extends the market to new entrants able to offer products and services that banking incumbents do not.
Furthermore, regulatory intervention serves to foster competition in the finance industry and is evidently necessary. The EU Payment Services Directive 2 (PSD2) was brought in during September 2018, and brought open banking requirements in across the EU, going further than the Retail Markets Investigation Order 2017 (CMA Order) in the UK which mandated that the biggest banks provide customers with the ability to share data with authorised APIs. The CMA Order revealed how regulation can motivate banks to modernise their services, but PSD2 gives consumers more choice and protection in opening up payments to third parties so they can access a variety of options when deciding how to pay and with whom to share their data.
Consequently, PSD2 will be a crucial mechanism for the UK financial services industry in order to remain competitive in Europe and across the world. The UK will therefore need to ensure it complies with EU regulations if it is to cement its position as a leader in open banking and continue to let the sector thrive. This means the UK is likely to align with EU regulation where it meets the needs of its own internal market, and is predicted to use regulation as a blueprint for its own but adjusted to meet its separate needs.
The road ahead for UK open banking
Regardless of the nature of the UK’s relationship with the EU, many experts suggest the UK open banking standard is broader than the EU’s PSD2, and therefore has potential to be utilised as a blueprint for other countries worldwide. Although the route forward for open banking is not clear, what is evident is that open banking technology will carry on driving innovation and competition within the financial services industry, with the consumer able to access more convenience and choice.
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The UK will make routes to economic growth a priority, which means open banking must play a major part in this. After the UK agrees technical standards and governance, open banking can present a competitive advantage via open APIs and enable the fintech sector to benefit from sustained growth into 2021 and onwards.
Learnings for businesses
The modern consumer wants efficiency, with services and products on demand. As such, open banking must be looked to when seeking to cater to the consumer. For example, cross-border payments, innovation around APIs, and automation, are all enabling companies to simplify complex payment processes, and make the experience quicker and easier, as well as allowing for easy scaling.
Payment solutions such as ECOMMPAY’s utilise open banking technology to enable consumers to initiate payments to merchants without the need for debit or credit card transactions, and are crucial in expediting efficient payments within and across borders, customised according to localised requirements.
Brexit has been on the horizon for several years now, allowing businesses time to establish contingency plans. As long as companies have invested wisely in their payment infrastructure, they will be in a good place to ensure sustainable growth for years to come.
Car production in the UK fell to its lowest level for 25 years during September, according to new figures released by the Society of Motor Manufacturers and Traders (SMMT).
A mere 114,732 cars were built by UK factories over the course of the month, around 6,000 (or 5%) less than in September 2019. The slump reflects general consumer uncertainty as new lockdown measures are imposed across the country, and as the UK approaches 31 December and the possibility of leaving the EU without first establishing a free trade deal.
Exports in September also declined 9.7% to 87,533 units, around 9,500 fewer vehicles sold overseas year-on-year. Overall, UK car production has fallen 35.9% behind levels seen in 2019. Car plants are forecasted to make fewer than 885,000 cars during 2020, marking the first time that production volumes will have fallen below one million since 2009.
“These figures are yet more grim reading for UK Automotive as coronavirus continues to wreak havoc both at home and in key overseas markets,” SMMT CEO Mike Hawes said in a statement.
“With the end of transition now just 63 days away, the fact that both sides are back around the table is a relief but we need negotiators to agree a deal urgently,” Hawes continued. “With production already strained, the additional blow of ‘no deal’ would be devastating for the sector, its workers and their families.”
One positive sign revealed by the September data was an uptick in battery-electric vehicles. Production of BEVs was up 37% from September 2019, with over three-quarters being exported.
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However, the boom in BEV production could yet be short-lived if no free trade deal with the EU is agreed upon. SMMT noted that, if the UK were to be subject to the WTO’s standard tariffs of 10%, the cost of UK-made electric cars exported to the EU would increase by an average £2,000 per vehicle.
Giles Coghlan, Chief Currency Analyst at HYCM, provides Finance Monthly with his insight into how the balance of markets and currencies may shift as December looms.
Brexit negotiations recently risked falling off the cliff edge as political posturing reached new heights. In the lead-up to the EU Leaders Summit on 15 October, Prime Minister Boris Johnson said the UK would stop negotiations outright if no credible progress was being made. Of course, in such a scenario, this would then open the door to a no-deal Brexit potentially unfolding.
The British pound has certainly been bearing the brunt of these Brexit worries throughout 2020, with sterling often falling to prices not consistently seen since the 1980s.
However, contrary to the forecasts of some commentators, talks have now advanced, and to put it in the words of EU officials: “intensified”. Those who believed a deal could be struck often reflected on how the initial withdrawal agreement was only agreed to mere weeks before the end of 2019, and it seems the UK government seeks to replicate such last-minute compromises as the final Brexit hurdle approaches.
So, after much grandstanding and posturing, daily talks have begun in an attempt to solidify a deal within three weeks, allowing the minimum amount of time needed to implement a post-Brexit trading relationship before 31 December.
Investors and traders must remain vigilant and aware of all the possibilities on the horizon. That’s why now is an ideal time to consider these possibilities and the impact they could have on the pound and financial markets more generally.
Investors and traders must remain vigilant and aware of all the possibilities on the horizon.
A clean break?
At the moment, it is still possible for a deal to be agreed upon by London and Brussels. Looking beyond the political rhetoric and grandstanding on display from both sides of the channel, a no-deal Brexit is not an ideal outcome for either parties. Of all the reasons, the sheer uncertainty and potential disruption that could be caused are of top concern.
So, if an agreement is made, this is expected to have an immediate impact on the value of the pound. We could see the pound instantly jump to $1.35 against the dollar, especially if the UK retains the same level of Single Market access as enjoyed previously. With goods still able to freely move between the UK and its European neighbours, a fruitful deal would dispel the long-standing uncertainty that has overshadowed UK economic forecasts since 2016. Sterling would undoubtedly benefit massively from the lifting of this worry from the minds of investors.
However, a final breakdown of negotiations and a no-deal Brexit is still something to be considered seriously. This outcome would likely incur an immediate devaluation of the pound to approximately $1.20, with the potential to fall further as the logistical issues of the UK’s new import/export reality are fully realised.
The third outcome, an extension of the withdrawal period and the continuation of negotiations, would likely provide a small boost to sterling’s value but not change the weekly volatility we’ve seen from the pound throughout 2020. Admittedly, such an outcome would require a re-ratification of the withdrawal agreement and signing off from all 27 EU state leaders who, given the ongoing COVID-19 crisis, may not be inclined to allow Brexit to distract from other pressing concerns for another year.
Regardless of if a deal is agreed upon or not, however, there will be other factors that could potentially affect sterling’s value in the foreign exchange markets. From geopolitics to COVID-19, I believe it is vital for investors to stay abreast of other unfolding trends that are affecting currency values in 2020.
We could see the pound instantly jump to $1.35 against the dollar, especially if the UK retains the same level of Single Market access as enjoyed previously.
Global factors
The recent jump in the pound’s value as a result of Brexit talks resuming in earnest was accompanied by a drop in the dollar’s value. This was seen as a consequence of stalling US Congressional talks regarding a COVID-19 relief package. Potentially more impactful for the dollar, though, is the upcoming US presidential election. Regardless of which candidate wins, a contested election – in which a candidate questions the validity of the results – could see the dollar’s value rapidly rise in risk off flows. The USD has been acting as a safe haven currency during the COVID-19 crisis and any potential of a Trump win would be seen as USD positive as US protectionist policies would look set to continue. However, the medium-term pressure on the USD favours a selling bias on record QE levels with interest rates set to remain low until 2023, according to the Federal Reserve’s latest minutes. If a Brexit deal is secured around the same time, some further GBP/USD upside could be encouraged by outflows from the USD.
Looking to the Bank of England (BoE), another potential change in sterling’s value could come as a result of negative interest rates. BoE governor Andrew Bailey has repeatedly confirmed such a policy is ‘in the BoE’s toolbox’ since August, demonstrating that this could help spur the country’s post-pandemic economic recovery. Thankfully for those unconvinced by this controversial policy, BoE deputy governor Dave Ramsden this week reassured investors that it was still not yet the ‘right time’ for such measures to be introduced.
Investors on alert
In summary, there are multiple ways the value of the sterling could be affected by geopolitical events this year. Volatility remains rife across global currency markets, and there is no indication of this volatility disappearing anytime soon.
This is especially relevant for investors, as research commissioned by HYCM earlier this year demonstrated that cash savings have become the premier asset class for those concerned about market uncertainty. Of the 900 investors surveyed, a massive 78% held cash savings, as opposed to the 48% with stocks and shares and 38% with property.
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So, for such investors with liquid-asset-heavy portfolios, keeping informed regarding the UK’s geopolitical situation is paramount for avoiding a sudden portfolio devaluation. Or, conversely, one should consider alternate safe-haven assets that also allow for hedging against uncertainty, such as gold, silver, copper or cryptocurrency, without the risk of long-term devaluation through basic monetary inflation.
Regardless of one’s specific strategy, investors and traders would do well to ensure they keep a level, informed head when approaching financial decisions in 2020. Despite any future potential uncertainty, I firmly believe there are still great investment opportunities to be found as the UK begins its transition outside of the EU. The challenge is finding them.
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The value of the pound dropped on Thursday as COVID-19 lockdown measures were reimposed across the UK and a key deadline arrived in Brexit talks.
The pound fell against the dollar and euro around noon on Thursday. Pound sterling fell 0.4% against the euro and 0.7% against the dollar, reaching €1.1025 and £1.2921 respectively.
The currency’s decline followed after UK health secretary Matt Hancock confirmed that restrictions would be increased in multiple regions of the UK from Saturday onwards. Most notable was the announcement that London would be upgraded to “Tier 2” restriction status in order to curb the continued spread of COVID-19, a move that is likely to impact major businesses in the area.
Under Tier 2 restrictions, separate households are banned from mixing indoors. Though pubs and restaurants will be permitted to remain open, the increased restrictions will likely have a significant impact on demand; Altus Group’s head of UK property tax, speculated that the measures “could be the death knell” for the more than 10,000 bars, pubs and restaurants in London.
The pound also suffered from investor attention turning towards Brexit negotiations. Last month, UK prime minister set 15 October as a deadline to reach a trade deal with the EU, pledging to walk away from the negotiations if an agreement could not be reached beforehand.
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However, some investors remain confident that the passing of the deadline will not spell the end for a potential deal. “In our view, neither the UK prime minister’s 15 October deadline nor the European Commission’s 31 October deadline constitutes a hard stop on Brexit negotiations,” wrote Goldman Sachs economist Adrian Paul in a letter to clients on Thursday.
Though the pound gained around 1% against the dollar and euro on Wednesday, its gains were later reversed as French president Emmanuel Macron took a hard stance on EU fishing states retaining access to the UK’s waters.
Rich Vibert, co-founder and CEO of Metomic, takes a look at the changes the UK financial sector will soon see and how banks can best prepare for them.
With headlines focused on the UK's plans to breach parts of the Brexit agreement, many key business discussions have fallen by the wayside. But, this begs the question: how are banks going to be protecting customer data? And, what data protection regulation is in place to govern this process as GDPR becomes inapplicable?
These are difficult questions to answer and require banks to unpick complex regulation and governmental disputes, before they can even start to implement the tools that will protect their customers.
Securing data privacy
Recent reports show that there’s room for improvement when it comes to the banks’ ability to secure data privacy. According to a Bitglass study, 62% of the data breached last year came from financial services, and with the increased risk brought by COVID-19, the prospect of what could happen to data collected and managed by banks is worrying. Furthermore, back in March, a report by Accenture showed that one-third of financial services organisations didn’t have the technical or personal resources to address privacy risks related to customer data. If these firms haven’t addressed this gap yet, they will simply not be prepared for Brexit and the risk that a potential last-minute change in regulations will pose.
Post-Brexit data protection: what is at stake
After investing two years of work to become compliant with the General Data Protection Regulation (GDPR), banks are understandably unwilling to start again. At present, once we are out of the EU, UK organisations will need to comply with regulation that is yet to exist. Thankfully, there is a large chance that the UK will incorporate GDPR principles into its own law, but uncertainty and confusion still remains. And should new local measures be implemented, banks will need to move quickly to become compliant.
After investing two years of work to become compliant with the General Data Protection Regulation (GDPR), banks are understandably unwilling to start again.
When it comes to data transfers with other European countries the rules will become stricter, adding extra layers of complexity for financial institutions.
As we stand, the UK government has already declared its willingness to reach an adequacy agreement, to maintain a free flow of data between the two regions. However, given the turbulent relationship with the EU, the agreement on such a deal is by no means a given.
Financial organisations also need to prepare for the possibility of a no-deal Brexit, with speculation that this could see companies sending their data to the EU next year and simply not getting it back. For businesses which heavily rely on constant transfers of sensitive data such as bank accounts and income, this is simply not acceptable. Unpicking the mess will require the investment of time and funds that many businesses can ill-afford.
The biggest loser: your customers' data privacy
While a potential headache for financial institutions, the UK’s lack of reassurance when it comes to post-Brexit data protection is even more detrimental to its own citizens. The government’s current track record for safeguarding people’s data leaves much to be desired. The recent admission that the UK track and trace system wasn’t GDPR compliant is just one example that has eroded citizens’ trust. The systematic disregard for data privacy has not gone unnoticed either. 75% of consumers report being concerned with the safety of the information they share with organisations, according to IDEX Biometrics. This has to be addressed if banks are going to survive and ensure that that customer trust is maintained.
A change in mindset
While the future of data regulation in this country remains in flux, we know that privacy and data protection is top of mind for consumers. To maintain the trust and loyalty of their customers, financial services organisations must think ahead and be prepared for any outcome, specifically at a technical level. But many organisations will be concerned about where to begin and how to navigate this journey.
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Thankfully, financial institutions can tackle this challenge without exorbitant costs but they will need a change of mindset. They must put customer data at the centre of their strategy and embrace technology that will help them put privacy first.
But this means having a clear understanding of what is happening to customer data at all times. There are simple mechanisms that can be put in place to deliver this level of control and visibility. These include automating compliance and embedding data protection rules into the IT infrastructure. Solutions such as these can be cost effective and have the potential to save thousands of hours in auditing and developing data management processes. What’s more, they will give businesses the right foundation for protecting data, whatever the regulatory outcome of Brexit.
While the future of data protection rules in the UK are still being negotiated, the financial services firms that embrace a privacy-first approach starting now will be better prepared for any outcome in the Brexit negotiations.
Going forward, collaboration with the EU is vital to prevent a scenario where data transfers are blocked. We need to work closely with our European counterparts to create a data privacy framework that's protective of UK citizens without being restrictive to our businesses. Only time will tell, but with the respect and protection of our data is in the hands of governments and businesses, data privacy can no longer be treated as an afterthought. If banks act now, and protect against the inevitable, the ultimate benefit will be earning their most important asset: their customers’ trust.
Financial services firms operating in the UK have shifted more than $1.6 trillion worth of assets and around 7,500 employees to the European Union ahead of Brexit, with more likely to follow in the weeks ahead, according to a report from Big Four accountancy firm Earnest and Yong (EY).
Tracking 222 of the largest financial firms maintaining significant operations in the UK, the EY report notes that around 400 relocations were announced in September alone amid uncertainty about the City of London’s continued access to the bloc in 2021.
EY also noted that there was very little movement in the first half of 2020, owing to the emergence of the COVID-19 pandemic and its impact on the banks. Businesses are now accelerating plans to relocate staff and operations from the UK ahead of its exit from the EU on 31 December and a possible second wave of COVID-19 lockdown measures forcing borders to reclose.
Since the UK’s vote to leave the EU in 2016, 44 financial services firms in London have created 2,850 new positions in EU nations. The biggest business gains have been seen in Dublin, Frankfurt and Luxembourg.
“As we fast approach the end of the transition period, we are seeing some firms act on the final phases of their Brexit planning, including relocations,” said Omar Ali, UK financial services managing partner at EY.
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“The time has now passed for firms to rely on short-term equivalence assessments that would align to EU rules, and the sector’s attention is increasingly focused on the longer-term outlook,” Ali added.
Major US banks with operations in the UK have begun to transfer their assets to the EU, such as JPMorgan, which has moved about $230 billion to a subsidiary in Frankfurt. Goldman Sachs has also planned to relocate over 100 London staff.
Tens of thousands of British citizens living in the EU have received notices from their UK-based banks warning them that their accounts will be closed by the end of the year, The Times has reported.
Major banks including Lloyds, Barclays and Coutts, have sent letters British account holders living in the EU with a warning that they will no longer receive service when the UK’s EU withdrawal agreement ends at 11pm on 31 December 2020.
Several thousand Barclays customers living in France, Spain and Belgium have already been given notice that their Barclaycards will be cancelled on 16 November.
In the absence of a Brexit deal, individual UK banks will now have to decide which EU nations they want to continue to operate in. As each of the 27 member states has different rules regarding banking, it will become illegal for UK banks to provide services for customers in these states without applying for new banking licenses.
Lloyds Bank has confirmed that it will no longer operate in Germany, Ireland, Italy, Portugal, Slovakia and the Netherlands; customers in these countries will have their accounts closed on 31 December. Coutts has also confirmed that its EU customers will have to make “alternative arrangements”, and Natwest and Santander have stated that they are “considering their options”.
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Nigel Green, CEO and founder of deVere Group, slammed the decision of banks to withdraw from EU nations and “abandon” their customers there.
“Once again, traditional banks are outrageously failing their clients who now need to take urgent steps to continue to be able to access, use, and manage their money,” Green said. “The move by these banks will be a major inconvenience to many tens of thousands of Brits living in the EU.”
“I would urge expats to now seek a financial services provider that already operates under pan-European rules,” he continued.
According to figures released by StockApps, the combined market cap of the five largest banks in Europe fell to $233.1 billion in August, a decrease of 42% since the start of 2020.
The massive loss in value for European banks can be attributed to the COVID-19 pandemic and its effect on consumer demand. Major European lenders were hit by a wave of financial losses during Q2, sinking their market value.
HSBC, Europe’s largest bank by asset value, saw its market cap plunge 45% to $88.1 billion in August, down from $161.5 at the beginning of the year. This figure began to slip even before the COVID-19 pandemic reached its height, falling to $114 billion in March.
Stark losses plagued Europe’s other major banks as well; PNB Paribas, Banco Santander SA and ING Group – the second, third and fifth largest banks in Europe – saw respective market capitalisation slides of $19.7 billion, $33.27 billion and $15.2 billion respectively.
Lloyds suffered the heaviest losses of the “big five”, its market cap standing at $25.1 billion in August, down from $58 billion at the end of December 2019 – a 56% drop. The fall stems from its £676 million losses in Q2, a drastic fall from the £1.3 billion profit it posted in the same period during 2019.
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“The outlook has clearly become more challenging since our first-quarter results, with the economic impact of lockdown considerably larger than expected at that time,” Lloyds CEO António Horta-Osório commented on the losses at the time of their release, which caused Lloyds to set aside an additional £2.4 billion as debt provision.
