The chief executive of Royal Bank of Scotland has waded into the debate over whether the UK should remain in the EU, saying that the uncertainty caused by the upcoming referendum could “slow down banking”.
Ross McEwan, a New Zealander, who has not previously expressed a view on the referendum, told BBC2’s Newsnight that the vote needed to be held as quickly as possible to end the uncertainty it was creating.
McEwan told the BBC he had seen no “economic data that suggests we’d be better off out, in the short to medium term”.
“The issue we’ve got is the uncertainty which slows businesses down, which will, over time, slow down banking so it’s … really good that the government is trying to have the vote very quickly,” said the boss of RBS, which is 73% owned by the taxpayer.
McEwan’s intervention came as a report published by economists at Deutsche Bank showed that the referendum was a risk to the share prices of banks, which have been highly volatile on the stock market this week, with the UK’s index of bank shares falling at one point to a seven-year low.
“We see the EU referendum as a risk for bank equity performance principally because of the uncertainty of the implications of Brexit for the outlook of the UK economy, and for the legal and regulatory framework of providing financial services into and out of the EU. A weaker UK economy in the event of Brexit would likely hit profitability thanks to looser monetary policy and credit losses,” the Deutsche Bank economists said.
“Financial market and global economic uncertainty have been key features of the first few weeks of 2016. One of the most important sources of uncertainty for the UK, however, revolves around a known event – the forthcoming referendum on EU membership, likely to be held this summer. While our baseline case is for the UK to vote to remain in the EU by a narrow majority, polls showing “leave” gaining ground highlight the risk.”
Before the last election, HSBC warned about the implications of leaving the EU as it embarked on a review of whether to keep its head office in the UK. The bank did not say that this would influence its decision on whether to stay in the UK. Its board meets on Sunday to discuss the location of the head office.
The HSBC chairman, Douglas Flint, said in April: “In February, we published a major research study which concluded that working to complete the single market in services and reforming the EU to make it more competitive were far less risky than going it alone, given the importance of EU markets to British trade.”
Barclays chairman John McFarlane has said that the clear majority of members of lobby group TheCityUK, which he represents, “feel that staying in a reformed Europe is the right choice”, while Lloyds chairman Lord Blackwell has said Britain’s membership is not sustainable without “significant change”.
