All Irish Banks and financial firms should inform customers about the risks of Brexit – Hayes
Irish Banks could be the real winners if the UK votes to remain in the EU
Brian Hayes MEP, speaking at Brexit Dublin International Insurance & Management Association (DIMA) seminar this morning, said that Irish financial institutions need to inform their customers and investors about the risks that Brexit poses and what contingency plans they have in place.
“The threat of Brexit is real and if the UK votes to leave, this will have an impact on all Irish citizens in some way. From a financial perspective, that risk is very profound for people who have invested their money either with a bank or another financial institution. I am calling on Irish banks and all financial institutions in Ireland to inform their customers or investors about the potential risks that Brexit poses to their money and what contingency plans they have put in place if a Brexit comes to pass. Let’s be clear about this – a vote to leave will have a major impact on Irish people’s investments.
“Financial markets in Europe are highly susceptible to a serious shock in the event of Brexit. There would be a huge impact on the value of sterling which in turn could have a possible knock-on effect on the value of the euro. The London Stock Exchange would very likely see a substantial drop in value. All major UK companies could suffer big devaluations. Notably, the value of Irish bank shares have fallen sharply in recent months and the threat of Brexit could be the major driving force behind this. However, if the UK votes to remain, Irish banks could be the real winners as there could be a massive upswing in the value of Irish bank shares.
“We have to remember that the financial services industry in Ireland is very closely linked to the financial services industry in the UK. Our financial services sector needs to be prepared for a Brexit and needs to keep its customers informed. Many financial institutions have already been doing this, including JP Morgan, who has published factsheets for investors about what they should consider in the run up to the referendum on 23rd June.
“Britain’s sovereign bonds are also at a serious risk. Standard and Poors chief sovereign ratings officer recently said that a leave vote would likely them to downgrade the UK’s Triple A rating, a rating it has held without interruption since 1978.
“The other risk is to pensioners in Ireland. Pension funds like investment funds and stocks are also susceptible to any major shock in financial markets. And since pension funds are currently suffering with the low interest rate environment, Brexit could push private pension funds into a very dangerous territory.
“What I believe is needed is clear information from banks and financial institutions to customers. This should not be about causing panic to investors. This should be about giving people facts and sound guidance. There is so much misinformation about what happens if Britain leaves, that it is important that Irish investors are provided with the essential information about the real risks.”