Up to 40,000 financial services jobs would leave Britain and banks’ costs could rise by as much as 4 percent if the U.K. leaves the EU without a trade deal, consultancy firm Oliver Wyman warned in a report published Tuesday.
A hard Brexit will likely fragment the European wholesale banking market, according to the report, making it “significantly less profitable.”
As a result of this fragmentation, the consultancy estimates wholesale banks, which cater to institutional and corporate clients, would need $30-50 billion in extra capital to fund new European operations, a 15-30 percent jump.
“Banks also expect operating costs to increase, as some functions previously centralized in London are duplicated in their EU subsidiary,” the report warned, adding 2-4 percent to wholesale banks’ annual cost base, or around $1 billion across the industry.
“A long-term shift in the wider financial markets ecosystem towards the EU could move around 35,000-40,000 jobs from the U.K. to the EU in wholesale banking alone,” the consultancy said.