Banks are very unpleased with Britons decision to leave the EU. Not only did shares of major global banks dropped significantly, the decision forced the banks to move a portion of their employees out of the UK. However, bigger picture appears to be a lot worse; markets are worried if banks indicate financial crisis.
The city that has long been considered as the financial capital of Europe could lose rougly 40,000 workers following Brexit. Much of the exodus may come from major US banks. HSBC and J.P. Morgan Chase CEO Jamie Dimon said that J.P. Morgan is likely to move at least 1,000 employees out of London.
“For the moment, we will continue to serve our clients as usual, and our operating model in the U.K. remains the same, Dimon added. “In the months ahead, however, we may need to make changes to our European legal entity structure and the location of some roles.”
What’s more, Lloyds of London has said that a significant number of the 34,000 employees in the insurance industry could be relocated out of the UK. PriceWaterhouseCoopers estimates that Brexit could cost between 70,000 to 100,000 financial services jobs by 2020.
In the wake of Brexit Barclays PLC shares plunged around 30% at one point Friday. It and Royal Bank of Scotland Group closed the day down roughly 18%, Deutsche Bank AG declined around 14%, France’s BNP Paribas SA tumbled almost 18%, Spain’s Banco Santander SA fell nearly 20%, and Italy’s UniCredit was down 23%.
Losses in the SS weren’t as severe, but still dramatic. Morgan Stanley fell about 10%, Citigroup Inc., seen as the most global of the US banks, dropped approximately 9%.
Taro Aso, the Japanese finance minister, said he was “very concerned about the world economy.”
The fact that equities and shares of global banks overreacted this way to relatively small shock in terms of global economy, in tandem with shift in safe haven gold trend and loss in control of economy by central banks indicate financial crisis.