The Influence of BREXIT on British Banking Companies Development Strategies

The withdrawal of the United Kingdom from the European Union has become one of the Black Swans of 2016 and represents the end of the Europe's stability. The concerns are raised as Brexit has a large impact on all economic sectors of the EU. The UK has one of the largest and most internationally active banking sector. Among the factors which contribute to the success of the industry the researchers name the UK’s well-developed financial infrastructure, a competitive fiscal policy, highly-skilled labour force and the rule of law. All these factors make the country the main global centre for cross-border trade of banking and insurance services. However, Brexit poses a threat to the prosperity of the UK’s banking sector which largely depends on the collaboration with European countries. This paper focuses on the consequences of the withdrawal of the UK from the EU for the British banking companies. Besides, it looks at the possible change in the companies’ strategies. To understand the effect of the event, we analyze the most recent data of the financial organizations and compare it with the previous statistics. As a result, we are able to make projections on the scenarios of the development of banking companies and assess their losses and profit. Moreover, we use cluster analysis to test the hypothesis that the UK is the financial centre of Europe. The results of the paper confirm our hypothesis and show that the British banks suffered losses because of Brexit and they changed the direction of their development strategies paying more attention to non-european countries. Now it is more beneficial for them to strengthen relationship with other regions as it is not obvious what relations the UK and the EU will have.