(Bloomberg) -- More than a quarter of European companies plan to reduce the amount of business they do with U.K. banks after Britain exits the European Union, according to a survey by Greenwich Associates.
Twenty-eight percent of companies on the continent are planning to move away from British banks, with 20 percent shifting business to global lenders, the financial services consulting firm said Tuesday, citing responses from 63 European and U.K. corporations. About 8 percent of U.K. companies will increase the amount of commerce they conduct with domestic lenders, according to the survey.
The key concern for companies is whether banks operating out of the City of London will be able to continue selling goods and services freely around the EU after Britain formally exits from the trading bloc. More than half of the European companies think banks in the U.K. will lose their so-called passporting rights, compared with 37 percent of British corporations, Greenwich said, citing 128 responses.
"If proven correct, this result would have a significant impact on the fabric of the European financial marketplace upon which these corporates depend, triggering further action to be taken by them," Greenwich said in the report.
Passporting rules are “not negotiable” and the EU won’t bend its rules to preserve single-market access for the City, German lawmaker Michael Fuchs, an ally of Chancellor Angela Merkel, said in a Bloomberg interview Tuesday. Bank executives are privately discouraged that two months after the referendum, the ministers in charge of negotiating the best deal for the U.K. believe they can retain the benefits of being in the single market without accepting the free movement of EU citizens, Bloomberg News reported earlier this month.
About 45 percent of the companies on the continent expected Brexit to have a negative or very negative long-term economic impact, while almost 30 percent of British firms felt similarly. Roughly half of U.K. companies have revisited their hedging strategies for interest rates and currency movements.