Brexit uncertainties starting to spread

SOUTH African dual-listed companies with offices in London are playing their cards close to their chest when it comes to contingency plans for a Brexit event.

Part of the problem is that the range of scenarios that could follow a UK exit from the EU is fairly broad.

Investec CEO Stephen Koseff said the company would not speculate on a likely outcome, but Investec’s house view was that the UK should remain part of the EU, given the potential negative implications for the UK’s economy if it left.

Despite London’s long-standing role as a financial hub for Europe, Koseff said a Brexit would be a setback for the city as a financial centre.

“While our businesses have shown resilience in the past, we cannot assume Investec will not be impacted by any fallout from a leave vote.”

In terms of exposure, Koseff said Investec’s asset management division had few of its assets under direct management from the UK, but its wealth and investment business was largely a UK concern, as was its specialist bank.

“There is no doubt that uncertainty around the UK’s continued membership of the EU has led to some activity being postponed, for example in our mergers and acquisitions and corporate finance business.”

He said the bank’s main competitors had seen the same effect.

“However, our business is diversified, with multiple income streams, which should aid our resilience. This was evident during the Greek financial crisis where we remained profitable throughout the period and did not require shareholder or government support.”

Shareholder reaction to a Brexit, he said, would depend on investors’ particular portfolio views on whether the UK should stay in the EU, since half of the group’s shares were held by South Africans and half by nonSouth Africans.

Anglo American spokeswoman Ann Farndell said the mining company did not do much physical UK-EU trade, which meant the implications of a Brexit would not have much direct commercial impact.

However, she said Anglo American was in favour of the UK remaining part of the EU for the purposes of market stability and business continuity, freedom of movement for talent that companies hoped to employ, and to retain the wider pro-business influence of the UK in the larger trade bloc of the EU.

Old Mutual plc’s head of corporate affairs, William BaldwinCharles, said the group — which is in the process of unbundling its business units, throwing the future of its London office into uncertainty anyway — said the group had assessed and planned for all possible scenarios. “We believe the outcomes are manageable, but we do recognise that a vote to leave will result in volatility in the short term.”

Mondi offered a similarly sanguine response, saying the decision by the British electorate would not have “any material impact on our business, as we have limited exposure in the UK”.

Uncertainty around EU has led to some activity being postponed