Caution Due to Low Growth and Interest Rate Post-Brexit

Caution Due to Low Growth and Interest Rate Post-Brexit

As Barclays PLC (ADR)’s trades get lower than the pre-market trading hours, they have been downgraded to sell from hold at Berenburg. These stocks have been on edge due the low interest rate and low growth rate environment after Brexit. Many other major European banks, including Barclays, have shown nice enough earnings boosting the stocks.

Barclays’ core markets i.e. the United States of America and United Kingdom or Great Britain had the firm focused on their investment banking division. Emerging markets like Asia and Africa’s growth has been endangered due to the low demand. All of the major banks are slowly pulling out of the emerging markets due to a slowing global economy. Earlier, they were their source of growth.

There was a restructure in process carried forward from the markets that are non-core to the bank by the Chief Executive Officer of Barclays, Jes Staley. The single entry point of access into the European markets position that London had was lost by London, which was a major blow to all the UK banks. This happened after the British exit from the European Union happened. As a contingency plan to Brexit, Barclays bank announced that it is prepared to move its headquarters to Dublin leaving its London Headquarters. This announcement was made last week.

A statement from the bank stated that they had made it very clear and repeatedly stated the same fact that they will be planning for a lot of contingencies due to Brexit. These contingencies may include increasing their existing Dublin operations to a greater capacity. They are just in search of a proper available office space that can accommodate their massive team and that is also said to be a part of their planning process for the contingency of Brexit. We can just hope that they come up with a contingency plan soon or else Barclays would lose most of their businesses.

After United Kingdom’s new Prime Minister Theresa May confirmed the haphazardly declared hard-exit, the banks have become more vigilant and outspoken about their plans of shifting away from London headquarters. Not only Barclays, but many investment firms like Goldman Sachs, JPMorgan Chase, UBS, and many other financial services companies believe that the amount of transfers of jobs will be more than what was previously anticipated. All this was declared post-Brexit due to the hard-exit of UK from the European Union. Let’s hope the banks use their collective intellect and mutually save each other from this drowning ship caused due to hard-Brexit.

Share this post

Leave a Reply