24-hour match: 2x your gift’s impact today! Double my donation
Conservative member of Parliament Boris Johnson speaks following the U.K.'s vote to leave the European Union. Mary Turner - WPA Pool/Getty Images

Brexit result will test U.S. banks

Marketplace Staff Jun 24, 2016
Conservative member of Parliament Boris Johnson speaks following the U.K.'s vote to leave the European Union. Mary Turner - WPA Pool/Getty Images

The U.K. has decided to leave the European Union, casting uncertainty over immigration, trade and the world’s financial markets. “Leave” voters won 52 percent to 48 percent, according to our partners at the BBC. 

But despite the turmoil that global markets and “Remain” voters  are currently facing, some business leaders are still projecting enthusiasm about the region’s future. 

Paul Marriage, a fund manager who runs a small business fund, was fairly upbeat. He told Marketplace that a weak sterling is “generally quite good for U.K. exporters. The sun came up this morning like it did yesterday … we’re a very dynamic economy.” 

Every major U.S. financial firm has substantial operations in London, which they use as a gateway to the European banking system. “U.K. banks have an access to the Eurozone payment system,” said Ilaria Maselli, a senior economist at the Conference Board.

So if you cut off the U.K., you cut off the banks. 

“Financial firms in London, whether U.S. or based anywhere else, might have to set up duplicate operations somewhere in Europe,” said David Hilder, senior bank analyst at Drexel Hamilton. Duplicate operations, duplicate regulations. He says this can cost a firm like JP Morgan dearly over time. “I mean potentially on the order of hundreds of millions of dollars,” Hilder said. 

This post has been updated.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.

Don’t miss this match!

Donate today and your gift will be matched dollar-for-dollar by the American Public Media Board.