European investment banks are in ‘twilight zone’, says lobbyist
INVESTMENT banks in Europe are stuck in “a twilight zone” as Britain prepares to leave the European Union with no clear picture of what its future relationship will be, the outgoing chief cheerleader for the industry has warned.
Simon Lewis, chief executive of European investment banking lobby group the Association for Financial Markets in Europe (AFME), announced this week he would step down in October after nine years. Headhunter Spencer Stuart has been appointed to find his successor, who will immediately face the task of navigating Brexit and defending the industry’s interests.
A former spokesman for Gordon Brown and the Queen, he took the reins when the banking industry was at the height of the post-financial crisis soul searching and has since been helping banks navigate through Brexit.
Investment banks in Europe are still facing potential massive disruption as Britain prepares to leave the EU. Theresa May’s Withdrawal Agreement has yet to be ratified by Parliament meaning no real discussion on what the future relationship with the bloc will be.
“Chances of a no-deal Brexit are now reduced but two weeks ago it was a different story. We’ve definitely seen a shift. Investment banks are as prepared as they could’ve been for crashing out,” Mr Lewis told The Daily Telegraph.
“But we can’t even start talking about any deal yet. The sooner we can start talking the better, but we are in the twilight zone.”
For investment banks and financial markets, ensuring a smooth transition is important in order to ensure financial stability and the smooth functioning of capital markets.
The EU has said only that it could improve the bloc’s existing “equivalence” system, which allows foreign financial firms market access if it deems their home rules equivalent or closely aligned to their own.
Britain however is wary of this because it fears access may be scrapped at short notice by the EU.
“It’s about establishing a much better understanding around equivalence and better regulatory and supervisory co-operation,” said Mr Lewis.
Mr Lewis defended the sector in the face of increased regulation from Britain, Europe and global financial watchdogs in the wake of the financial crisis.
“It felt like we were in the trenches. All the new regulation that was coming through and the unintended consequences of that regulation,” he said.
“Nine years on and we now see proper constructive engagement with the industry from politicians.”