Half European Treasurers and CFOs see possibility of 'Brexit' - Greenwich Associates

Half European Treasurers and CFOs see the possibility of 'Brexit', according to the latest official report issued by Greenwich Associates, noting that despite fears of a disorderly exit, most companies not acting to manage risks.

Key Quotes

"More than half of corporate treasurers and CFOs in the U.K. and continental Europe believe it is at least somewhat likely that the U.K. will leave the European Union. Most of these executives think a so-called “Brexit” would be a disorderly and potentially volatile process. Despite these beliefs, most corporate officers have not taken any actions to minimize the negative effects of a U.K. exit on their companies."

Greenwich Associates interviewed treasurers at 90 large Western European corporates in the U.K. and continental Europe from April 12–27."

"The study results establish conclusively that: 1) Companies in the U.K. and continental Europe see Brexit as a real possibility, and 2) Given companies’ deep levels of integration across the two markets, corporate treasury officials think a U.K. exit would have a significant impact on their own businesses and overall trade. In light of this, it is surprising to find that few executives have put in place security measures to protect their companies from the expected volatility."

"Fewer than 1 in 4 corporate treasurers interviewed has put in place any hedges to protect against currency and/or interest-rate volatility — the two areas of risk exposure cited most frequently by study participants. Companies have taken even less action on other risks that they see as possible but harder to measure and protect against. Among such risks cited by financial officers are significant changes in regulation effecting trade and capital mobility, decreased access to liquidity and increasing cost of funding, and the possible introduction of a withholding tax."