Powered by MOMENTUM MEDIA
Broker Daily logo

Emotional Brexit rhetoric puts banks at risk

The potential for Brexit negotiations to be “hijacked by emotion” rather than level-headed discussion poses new challenges for banks across Europe and the UK, according to KPMG.

The consultancy firm cautioned that the rising popularity of nationalism, evidenced in Donald Trump’s rise to power in the US and Matteo Renzi’s failed referendum in Italy, have created a backdrop against which “emotions threaten to crowd out business logic” during Brexit negotiations.

KPMG bank sales team partner Joe Cassidy said that “this mood has implications for banking and capital markets” as it could spell an end to the global co-ordination of banking regulators seen since the end of the 2008 financial crisis.

“2017 may be the year in which that global regulatory consensus cracks under the weight of these social and political pressures,” he said.

==
==

Mr Cassidy said the ideal result for banks in the Eurozone would be to create a capital markets union to preserve the existing financial services supply chain in which London plays a critical role, but research conducted by KPMG found many banking executives feared this may not be the case.

“Banking executives we speak to in the UK fear that the negotiators – on both sides of Brexit talks – could become trapped by ideology or hijacked by emotion, especially if Europe experiences further social and political upheaval in 2017,” he said.

“Even if that doesn’t happen, many in the EU are firm in their opposition to the UK picking and choosing the elements of Europe that it likes ‘à la carte’.”

Regardless of how negotiations turn out, Mr Cassidy said it would be crucial for banks to make Brexit preparations.

[Related: Asset trader makes 'outrageous' 2017 predictions]

More on Economy
21 November 2024
After witnessing some positive trends in the offset of COVID-19, business failures across the country have picked up ...
21 November 2024
With GDP growth at just 0.2 per cent as of the June quarter of 2024, small and medium-sized enterprises (SMEs) are ...
20 November 2024
The RBA minutes for the November meeting revealed that members recognised the importance of flexibility in monetary ...