Sections

Brexit would cause no major disruption to asset managers – Moody's

Related Categories

A UK exit, or Brexit, from the European Union would pose little threat to asset managers’ creditworthiness and have minimal impact on the management of institutional assets, according to Moody’s.

The ratings agency said there would be no immediate changes to asset managers’ operations in the event of a vote to leave because the UK would have two years to renegotiate its terms of trading and dealing with the EU.

It said the operational and business impact for most managers it rates would be manageable.

UK managers will lose management and marketing passporting rights because they would become “third-country firms”, but Moody’s does not expect this to have “profound implications for the asset management industry overall”.

This is for several reasons, including that many UK groups operate in Continental Europe through subsidiaries, and vice versa for Continental European managers.

Financial market volatility resulting from Brexit, however, will weigh on asset managers’ profitability.

Neither will Brexit have much impact on the management of institutional assets, according to Moody’s.

It noted that the Markets in Financial Instruments Directive (MiFID) applies in the EU with respect to institutional clients’ private placements or segregated accounts.

It said it expected the UK, if it left the EU, would “meet the equivalence test and be able to continue servicing institutional investors in the EU”.

Moody’s also noted that any asset-manager services provided “at the exclusive initiative” of institutional investors have no prerequisite requirements.

If the UK, however, decides to depart from EU regulation and not implement the revised MiFID, then “servicing EU clients from the UK would become more difficult”.

This is not Moody’s main scenario, it said.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • DS-2382

    Closing date: 2017-12-14.

  • QN-2383

    Asset class: Residential Property.
    Asset region: Ireland.
    Size: EUR 10m.
    Closing date: 2017-12-18.

  • QN-2384

    Asset class: Equities Switzerland (Large Caps).
    Asset region: Switzerland.
    Size: CHF 550 – 600 mn.
    Closing date: 2017-12-15.

  • QN-2385

    Asset class: Liability Driven Investment.
    Asset region: Europe.
    Size: Size: EUR 1 Billion, Liability size: EUR 3 Billion.
    Closing date: 2018-01-08.

  • QN-2386

    Asset class: Fixed income.
    Asset region: Global developed markets.
    Size: CHF 500 -1000m.
    Closing date: 2018-01-15.

  • DS-2392

    Closing date: 2017-12-21.

  • QN-2393

    Asset class: All/Large Cap Equities.
    Asset region: Europe.
    Size: EUR 200m.
    Closing date: 2017-12-21.

  • QN-2394

    Asset class: Real Estate Industrial.
    Asset region: Europe.
    Size: EUR 10m.
    Closing date: 2018-01-04.

Begin Your Search Here