LIFE AFTER BREXIT:

After months of fierce debate and a policymaking hiatus, the

UK electorate has voted to leave the European Union (EU).

Companies will face considerable uncertainty until the UK’s exit strategy from the EU is fully defined and trade negotiations with other countries are completed.

MANAGING THE NEW RISK ENVIRONMENT

If “passporting” rights – the ability of financial services firms based in one EU country to operate in another without setting up a new legal entity—are not resolved, banks (both UK- and EU-domiciled) may be required to set up additional operations or headquarters elsewhere, with revenues travelling accordingly.

43%* of total EMEA (Europe, Middle East and Africa) revenues for capital markets and investment banking is at significant risk of migrating if “passporting” is not resolved.*Based on 2013-14 figures

POTENTIAL RISK

GDP growth and regulatory uncertainties may deter foreign direct investment to the UK in the short-term.

In the months running up to the “Brexit” vote, IPOs and private equity deals and corporate credit demand so�ened—how long this might last is a critical factor.* As of June 19, 2016

POTENTIAL RISK

Based on negotiations that will determine the circumstances of EU citizens currently working in the UK labor market, employment mobility constraints may influence how multinational companies operate.

Two million employees who are EU citizens currently working in the UK may be a�ected by labor market complexity.

POTENTIAL RISK

3 AREAS OF FOCUS FOR RISK MANAGERS

Protect against stress on capital and credit positions resulting from market volatility and possible negative GDP impacts.

Monitor economic and political contagion in other markets, and the associated business consequences.

Track negotiations on passporting arrangements and tari�s to inform restructuring plans for UK operations.

Analyze likely changes in regulatory regimes on capital requirements and operational constraints to inform industry consultations.

Anticipate UK labor market constraints (faster than regulatory change and trade deals) and impacts on competitive pay levels.

Assess cross-border implications for employee healthcare, and also pension scheme performance and risk management.

SO, WHAT NOW?

51.9% 48.1%Leave Remain

17,410,742 votes 16,141,241 votes

REFERENDUM RESULTS

Sources: http://www.bbc.com/news/uk-politics-32810887; Oliver Wyman proprietary data, research and analysis; BIS; World Federation of Exchanges;http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/february2016

A NEW RISK ENVIRONMENT

CORPORATESTRATEGY IMPLICATIONS

WORKFORCE DISLOCATION

1

THE VALUE OF UK IPOs DECREASED BY NEARLY HALF

THE VALUE OF GLOBAL IPOs MORE THAN DOUBLED

Q1 2016 Q2 2016*

Q1 2016 Q2 2016*

$2.15B$1.14B

$8.9B

$22.7B

RECOMMENDATIONSRECOMMENDATIONS RECOMMENDATIONS

32

EMEA REVENUE

43%

AT RISK OF MIGRATION

... ...

MEANWHILE...

THERE ARE CURRENTLY

FULL TIME EMPLOYEES IN THE UK.

ARE EU CITIZENS.

OF THESE,

23 MILLION

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