Brexit Vote Leads Berlin Hyp to Postpone London Expansion
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Banks are reviewing their London presence, executives say
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U.K. property prices may be falling faster than stats: NAMA
Berlin Hyp AG has delayed plans to open an office in the U.K. capital after the Brexit vote, providing evidence how the uncertainty created by the June referendum is impacting banks’ investment plans.
“We have postponed the creation of an office in London until the modalities of the U.K.’s exit from the European Union have become clear and can be assessed,” the Pfandbrief bank said by e-mail. Berlin Hyp had 27.8 billion euros ($29.4 billion) of assets at the end of September compared with 28.5 billion euros at the end of last year.
German lenders, some of which have used their nation’s Pfandbrief legislation to offer cheap credit for British commercial mortgages, may see such activity derailed by Brexit as the law limits loans to properties in the EU and European Economic Area. About 17 percent of U.K. commercial-property loans in the first half of the year were advanced by German lenders, according to a survey by Leicester, England-based De Montfort University.
Many banks with European operations in London are reviewing their presence in the capital because they stand to lose their EU passporting rights, according to UBS Group AG’s German investment bank head Stefan Winter, who also leads the country’s association of foreign banks. It is unlikely that they will implement their Brexit plans before the U.K. government officially triggers the withdrawal process, he said.
International businesses may shift as many as 100,000 jobs away from London within two years of the U.K. officially starting a process to leave the EU because businesses risk losing their passporting rights, according to Jefferies Group LLC analyst Mike Prew. Rents could fall 8 percent to 10 percent over the next 24 months, he said.
“Plan A for banks is to stay in London and move as little as possible,” Deutsche Bank AG analyst Jochen Moebert said by telephone. “But there will be movements once the uncertainty lifts.”
U.K. real estate prices may already be dropping at a much faster pace than official reports indicate following the referendum, Ireland’s National Asset Management Agency said last week.