Asset managers are getting ready to quit the UK and Bank of England chiefs are set to help banks following the EU referendum.
The Financial Times reported that asset managers had begun a “slow detachment” from London following last month's vote.
M&G (LON:MGHI), Columbia Threadneedle, Legg Mason, Fidelity International and T Rowe Price had all outlined plans to move staff from London or set up fund ranges in neighbouring EU countries to avoid being locked out of fundraising in the bloc, the newspaper reported.
Asset managers fear that a UK exit from the EU would threaten Britain’s position as the world’s second-biggest centre for the industry after the US, the FT said.
The newspaper also said Bank of America Corp (NYSE:BAC) was close to calling off the sale of its £7bn MBNA credit card business in the UK after the referendum result reduced demand from bidders.
BofA is said to be reviewing plans for the auction, which has attracted interest from the likes of Lloyds Banking Group PLC (LON:LLOY) and private equity groups Cerberus and TPG.
Meanwhile, Bank of England chiefs are tipped to relieve banks of the need to increase their capital buffers as the UK economy weakens following the referendum vote to leave the EU.
The bank’s financial policy committee on Tuesday is set to reverse the rise in the “counter-cyclical buffer” to 0.5% that it announced in March, Goldman Sachs Group Inc (NYSE:GS) said in a note.
The decision would reflect a switch in the central bank’s approach towards providing supportive credit conditions rather than guarding against excessive credit growth.
Goldman expects the committee to say domestic risks now dominate the UK economic outlook, although it does not anticipate the committee taking any supportive action at the moment.
But cyclical assets that have grown significantly, such as unsecured lending and buy-to-let mortgages, are seen as key risk areas.
Goldman is advising investors to buy into Royal Bank of Scotland PLC (LON:RBS), which it says has ample capital and funding buffers and a more domestic focus than more internationally targeted rivals.
It also sees Asia-focused Standard Chartered PLC (LON:STAN) as a ‘buy’.
In a separate report, Goldman said flows into UK equity funds initially responded positively following the referendum result, but then faded.
Eurozone area funds were quicker to see outflows, but also showed signs of stabilising more rapidly.
"We estimate that (more than) 90% of UK funds may have underperformed the FTSE UK All Share index this month," Goldman said.