What does Brexit mean?
It is a word that has become used as a shorthand way of saying the UK leaving the European Union – often known as the EU, which is an economic and political partnership involving 28 European countries – merging the words Britain and exit to get Brexit, in a same way as a possible Greek exit from the euro was dubbed Grexit in the past.
Why is Britain leaving the European Union?
A referendum – a vote in which everyone (or nearly everyone) of voting age can take part – was held on Thursday 23 June, to decide whether the UK should leave or remain in the European Union. Leave won by 52% to 48%. The referendum turnout was 71.8%, with more than 30 million people voting.
The Brexit has made an important on the UK pound when happened. In fact it has lead to the devaluation of the sterling. And a lot of financial insistutions have suffered of this devaluation. We are going to illustrate this by the example of the HBSC and the Prudential.
Actions of HBSC after the annoncement of the Brexit : HSBC ‘plans to move 1,000 jobs to Paris’ due to Brexit
The top boss of HSBC has said it is planning to move some staff from London to Paris following Britain’s exit from the European Union.
Chief Executive Stuart Gulliver revealed that in interviews at the World Economic Forum in Davos, Switzerland.
He said that Europe’s biggest bank would likely look to shift around 1,000 workers who generate around 20 percent of its trading revenue.
HSBC’s global banking and markets division that houses those trading jobs made profits of $384 million in the UK in 2015, according to a company filing.
The timing on that is in around two years’ time when the UK has fully left the EU.
“We’re not moving this year and maybe not even next year. We will move in about two years time when Brexit becomes effective,” Gulliver said.
HSBC is at an advantage to its major US rivals as it already has a large subsidiary in Paris that holds most of the licences needed by an investment bank, meaning Gulliver has been able to set out more detailed plans.
Gulliver said HSBC will especially monitor developments on work permits, given that his bank’s UK operations employ about 2,100 EU citizens in the UK and 1,300 more staff from outside the bloc.
HSBC is in the middle of a program to redeploy as much as £122bn in assets to Asia and hire 4,000 people in the Pearl River Delta region around Hong Kong.
Actions of Prudential after the Brexit anouncement : Prudential could relocate M&G funds due to Britain leaving the EU
Prudential said its UK operations, which includes fund management division M&G, could be hit by Brexit.
A tenth of Prudential’s M&G’s £255.4 billion in assets under management are from EU clients.
Anne Richard, the chief executive of M&G, said the decision to move assets will depend on the outcome of UK’s negotiations with the EU.
« What we are trying to do as a business is give ourselves options so we are in a position to react and adapt to whatever negotiations come through over the next year or so regarding Brexit, » Richard said.
« We have, at the moment, business domiciled in both Dublin and Luxemburg so both of those would potentially be options for us if we felt that we should have additional funds domiciled in continental Europe, » she added.
British insurers were hit hard in the immediate aftermath of the Brexit vote, with share prices tumbling on expectations that the fallout in the broader economy would hurt the firms.
« On Brexit it is a challenge for the whole industry in that we don’t know exactly what form it will take. Will there be fund passporting from the UK to Europe, and vice versa, or not? » Richard said.
The news that Prudential UK operations could be hit by Brexit came as the group released its first half results.
Prudential posted a 6 per cent increase in first-half profit as a jump in earnings at its Asia business helped it to beat analyst estimates and offset lower profits from M&G
M&G’s operating profit declined by 10 per cent to £225 million.