UBS, which is a leading banking company hailing from Switzerland has decided that it is time to face the coming Brexit fallout ahead of time and completely withdraw from the island nation. The EU banking license holder has been given the approval to take out more than EUR 32 billion out of the UK. That is a serious hit to the country’s economy, no matter how rich it is. This type of sentiment has been going on for a very long time in the UK. Companies just cannot face the upcoming tension and uncertainties that Brexit will cause. Therefore, without having to risk it all, they simply withdraw from the country. Banks in the UK have been extra anxious about the losses, which is illustrated by the UBS withdrawal. All that remains to be seen is if this will cause a domino effect.
Less money on the Island
The funds will be transferred to another branch of UBS. It will be taken out of the UK division and sent over to the company’s Frankfurt subsidiary in Germany. The transaction will happen on March 1st, just a few weeks before Brexit. The reason is quite simple to understand. UBS is afraid that being stationed in the UK may disrupt its operations for servicing EU clients, and they’re not alone, the same can be said about UK Forex brokers. But the withdrawal is still quite surprising. If they are so concerned with the EU market, it makes little sense to “abandon” the UK market, it’s not as small as you may think. Naturally, it’s smaller than EU, but a withdrawal of such caliber could potentially cripple UBS’s operations in the UK. Not only that, but the Swiss bank is also considering to reduce their staff on the island. According to reports from the company, they currently have a 5,000-strong workforce, which will most likely see 200 taken away to Frankfurt, which in turn may be followed up with a merge of London and Frankfurt subsidiaries.
An outflow of Financial institutions
If you thought that UBS taking out 32 billion was a lot, you should see how much Barclays has decided to withdraw. Last week, more than 190 billion EUR was approved to be taken out of the UK by Barclays, if this keeps up than what will even be left in the country? Such an outflow of funds is sure to cripple the economy. The funds will be transferred over to their Dublin subsidiary, alongside a doubling of the staff. The Royal Bank of Scotland also announced their plans to move more than 13 billion GBP to the Netherlands. The UK, where people think that the revolutionization of finance began, may see the downfall of wealth accumulated over several centuries of struggle. At this point, it’s hard to remain neutral about the whole ordeal. Since such large companies are bailing from the island, it’s only natural that there will be some serious economic damage.