A sign is displayed in the reception of the Sydney offices of Goldman Sachs in Australia, May 18, 2016. REUTERS/David Gray
BENGALURU: Earnings of large US banks would be hit by 1%-6% this year if Britons vote in favour of leaving the European Union next week, according to brokerage Keefe, Bruyette & Woods (KBW).
Britain’s exit could increase costs and weaken capital market activity, hurting banks such as Goldman Sachs Group Inc, Morgan Stanley, JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp, KBW analyst Brian Kleinhanzl wrote in a note on Thursday.
Morgan Stanley and Goldman Sachs, with large exposure to the capital markets, are expected to be the worst hit, Kleinhanzl said.
“Banks may have a two-year transition period and they could experience both revenue and expense headwinds during the transition,” he wrote.
For 2017, the impact on these banks’ earnings per share would be 2%-9%, he said.
US mortgage lender Wells Fargo & Co is likely to be least impacted by a “yes” vote on June 23, the brokerage said.
However, in the longer term, the impact of Brexit is expected to be “a wash for US universal banks,” Kleinhanzl said. - Reuters
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