Brexit: the international reaction

Added 24th June 2016

The UK narrowly voted on Thursday (52:48) to leave the European Union, an unprecedented move with an unclear outcome. What follows will undoubtedly be at least two years of uncertainty, but how will the offshore financial centres fare?

Brexit: the international reaction

For Paul Stanfield, chief executive of the Federation of European IFAs (Feifa), the vote outcome is a journey into the unknown.

“This is unprecedented territory, so none of us know what is going to happen next, especially from a point of view of financial services regulation. A lot of it is now down to negotiation and agreement between 28 countries,” he told International Adviser.

A sentiment echoed by the European Fund and Asset Management Association (FAMA): “The practical consequences cannot be clearly identified before a proper and longer term impact assessment has been made.”

Jersey stability

“In terms of market access nothing has changed and we are, in fact, in quite a strong position,” Geoff Cook, chief executive of Jersey Finance told IA.

With Jersey’s financial services sector not covered by Protocol 3 the UK’s Treaty of Accession with the EU, “we have already had a bilateral dialogue and developed relationship with European countries”, Cook explains.

“The Brexit vote is the start of a journey into the unknown for both the UK and the Isle of Man, as this situation is without precedent."

“There is in fact no actual change to Jersey’s status as we’re already an approved third country relationship.”

Cooling investments

As people adjust to their new reality, Cook expects that all countries will experience a slowdown in investment activity for a time: “A few brave hearts will take the plunge but many investors will sit on their hands until they see how things develop and get some sort of sense of understanding of what Britain’s new relationship with Europe will be.”

He expects that, during that period of slowdown and uncertainty, there will be increased interest in Jersey and other jurisdictions: “If people are going to make investment commitments, the likelihood of them making them through Jersey has increased.”

Cook is confident, however, that this will be a “bump in the road for Britain” and that the UK will remain one of the leading centres for financial services, with Jersey “an important partner for, and with, the City of London”.

Guernsey preparation

“This is a historic decision and, indeed, a historic day,” says Dominic Wheatley, chief executive of Guernsey Finance. “However, although the decision is clear, we have yet to see how it will be implemented and the new world that will be formed in this process. We will be monitoring developments closely to assess the impact of this on Guernsey and the financial markets in which we operate.”

For Jonathan Le Tocq, lead for external relations for Guernsey’s policy and resources committee, there will not be major changes ahead for the jurisdiction: “The States of Guernsey, alongside the States of Jersey, have been working with the Channel Islands Brussels Office in the run up to the referendum since 2012. 

“We understand our relationships with the EU much more clearly and we have strengthened our relationships with the UK government in this area. This places us in a good position to ensure that the best interests of the islands and its residents are taken into account during the months and years of negotiations that lie ahead.”

Isle of Man realism

“Although the Isle of Man is not part of the EU, the UK’s withdrawal will nevertheless have a significant impact on the island,” says Isle of Man chief minister Allan Bell.

“The Brexit vote is the start of a journey into the unknown for both the UK and the Isle of Man, as this situation is without precedent. The potential implications are far reaching and could impact on the structure of the UK itself, as well as the future of Europe.

“Much will depend on what new economic arrangement the UK can negotiate with the EU, and how the Isle of Man as a crown dependency can fit into that framework. We will have to stay very close to the negotiations to ensure that the Island’s needs are known and protected,” Bell says.

Malta is still EU

As an EU member state, the impact of the UK’s departure creates less uncertainty for Malta than for the other financial centres. Given the close, historic relation between the two, Maltese citizens living in the UK were eligible to vote in the referendum.

Speaking to IA, Joe Bannister chairman of the Malta Financial Services Authority (MFSA) admits that the “mood on the ground is disbelief”.

“Obviously there will be a period of uncertainty. We are a bit unclear about how long this is going to prevail.”

Bannister is confident, however, that the island’s financial services sector will be fine, with little impact on cross-border activities and banking.

The insurance sector could see some impact, but there are “other ways to mitigate those issues”, he says.

“For the moment it is the status quo,” he says.

Gibraltar

Gibraltarians also took to the polling booths on Thursday to cast their vote. More than 19,300 people voted to remain, accounting for 96% of the vote. Turnout was at nearly 84%.

When contacted, the government of Gibraltar advised that no statement would be made prior to the chief minister making an announcement later this afternoon.  

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About Author

Kirsten Hastings

Senior Reporter

Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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