Barclays Japan on Brexit
Jan. 24, 2017
Mark Dearlove, Barclays’ Country Head of Japan, comments on Brexit and on the bank's preparedness for the various possible outcomes.
"For many months at least, Brexit will be the subject of intense speculation and very little clarity. There are many unknowns about what exiting the European Union will involve and how long it will take. We would all like firm, clear answers, but given the complexity and politics of the negotiations, we are unlikely to get them soon. For every decision, there will be a dozen new questions.
"Because of our UK roots, Barclays’ offices across Asia find themselves receiving lots of questions about Brexit, and what it implies for the region and individual countries. We cannot give certainty where there is none, but we can be clear in telling people what we have heard repeatedly from the May Government, namely that the Government is acutely aware of the importance to UK-based companies of continued open access to Europe from Britain.
"In his visit here in December, the Chancellor of the Exchequer, Philip Hammond, said as much after a meeting with local financial institutions that we jointly convened with the UK Ambassador, Tim Hitchens. As Chancellor Hammond told the press afterwards, “We’ve been clear that we will seek maximum possible access to European markets on a reciprocal basis for our firms in terms of goods and services.”
"For Japan, the stakes are higher than for many other countries in the region, given the strong presence in Europe of Japanese companies.
"That was no doubt why the Japanese Government, in September last year, sent the UK Government and the EU a letter outlining concerns, mostly on ensuring that UK-based Japanese companies would continue to have open access to the EU market.
"The letter reminded the UK and EU that Japanese businesses have created 440,000 jobs in Europe, and that in 2015, almost half of Japanese direct investment in the EU went to the UK. Further, more than 1000 Japanese companies have offices in the UK; for many, the UK is their European base.
"For our part, we believe that any political settlement should retain as much access as possible to the European capital markets by UK regulated banks, as well as reciprocal continued access to the hugely important British capital markets for European companies and banks. But those details, and hundreds of others, are still being worked out.
"Instead of worrying about what cannot be known, it is more useful to focus on what we do know, and to prepare ourselves for any of the various possible outcomes. For Barclays, the fact is that our customers and clients worldwide will continue to look to us for advice, for financing, and for partnership and we will continue to be there for them.
"Like many other companies, we have thought long and hard about the various options we may face, and how we might respond to each of them. We are confident that we are prepared to do so, without breaking stride.
"That may sound like a brave statement, but compared to the challenge of creating a completely new Intermediate Holding Company in the US, as we did on July 1st, 2016, let alone establishing a completely new ring-fenced bank in the UK from scratch, any option we might face after Brexit would be significantly less complex and less costly.
"It helps that we have been a part of life in the UK for more than 300 years and have already learned to navigate through periods of uncertainty, and much worse. That sort of heritage brings its own perspective, and helps us to focus on what really matters to our clients and customers in a time of some uncertainty.
"Through world wars and the Depression and recessions, through oil crises and national strikes and winters of discontent, we have made our first priority being there for our customers – as, of course, we have been in times of peace and prosperity too.
"We are well aware that a drop in the value of the pound affects the economy in all sorts of ways, but what really matters to us is how it affects the people who trust us with their savings and mortgages and investments.
"We know that the slower economic growth widely tipped to follow Brexit can dampen sales and slow job creation, but our concern must be with the businesses and the people affected, and no matter what, we will be here to assist them weather any difficulties.
"Brexit, as with most major changes, will also bring new opportunities, and we are ready to help our clients and customers take advantage of them with advice and financing. While we cannot yet know the exact shape that Brexit will take, we are confident that it can be managed in a way that sees Britain emerge stronger. We will play our part, as we have done for more than three centuries."
Mark Dearlove, CEO of Barclays Japan, will be a panelist at the BCCJ event '2017 Business Trends from the C-Suite' on 1 February 2017 along with Philippe Fauchet OBE, President GlaxoSmithKline K.K. and Magnus Hansson, CEO Jaguar LandRover Japan. More details and booking HERE
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