The cost faced by UK banks of restructuring operations because of Brexit could be as high as €15bn (£13.1bn) and is likely to put a “material strain” on those institutions' earnings over the coming years, according to a new study.

Research commissioned by the Association for Financial Markets in Europe and conducted by Boston Consulting Group and Clifford Chance, argues that lenders operating with UK bank licences will most likely have to create subsidiaries within the remaining countries of the EU in order to keep operating as they have done up until now in the aftermath of the split.

The cumulative cost of this restructuring could be as high as €15bn, according to the research, with the bill for each individual bank depending on its current geographical footprint and client focus.

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Amortised over three to five years, the financial hit could reduce return on equity for affected banks, an important measure of performance, by 0.5 to 0.8 percentage points, which the study describes as a “material impact”.

“Much has been said about the challenges of a hard Brexit for banks, but that only tells half the story,” said Chris Bates, a partner at Clifford Chance.

The latest research, he said, “shines a light on some of the challenges that a hard Brexit would present [for] business users of banking services, and how it would affect the real economy in both the UK and EU 27”.

“Measures to smooth the transition are critical,” he said. “The costs of the cliff edge have never been so clear.”

The study was based on interviews with dozens of chief executive officer and treasurers of companies of all sizes as well as investors and representatives from industry associations representing companies from a range of sectors and geographies.

It concludes that businesses may be underestimating the banking-related effects of a hard Brexit and it estimates that, in aggregate, approximately €1.28 trillion of bank assets may need to be rebooked, or relocated, from the UK to a country inside the EU following a hard Brexit, unless alternative arrangements can be agreed.

Securities and derivatives trading operations of banks are most at risk of disruption from a hard Brexit and businesses relying on those operations are vulnerable.

Around 55 per cent of respondents representing small or medium-sized companies said that they had made no plans so far for Brexit, compared with only 27 per cent who said that they had carried out some internal planning and around 18 per cent who had executed plans.

“The clear message from our report is that our interviewees, especially small firms with customers or suppliers cross-border, believe that a hard Brexit could impact their business and growth,” said Simon Lewis, chief executive of AFME.

Shape Created with Sketch. How Brexit affected Britain's favourite foods from Weetabix to Marmite Show all 8 left Created with Sketch. right Created with Sketch. Shape Created with Sketch. How Brexit affected Britain's favourite foods from Weetabix to Marmite 1/8 Weetabix Chief executive of Weetabix Giles Turrell has warned that the price of one of the nation’s favourite breakfast are likely to go up this year by low-single digits in percentage terms. Reuters 2/8 Nescafé The cost of a 100g jar of Nescafé Original at Sainsbury’s has gone up 40p from £2.75 to £3.15 – a 14 per cent rise—since the Brexit vote. PA 3/8 Freddo When contacted by The Independent this month, a Mondelez spokesperson declined to discuss specific brands but confirmed that there would be "selective" price increases across its range despite the American multi-national confectionery giant reporting profits of $548m (£450m) in its last three-month financial period. Mondelez, which bought Cadbury in 2010, said rising commodity costs combined with the slump in the value of the pound had made its products more expensive to make. Cadbury 4/8 Mr Kipling cakes Premier Foods, the maker of Mr Kipling and Bisto gravy, said that it was considering price rises on a case-by-case basis Reuters 5/8 Walkers Crisps Walkers, owned by US giant PepsiCo, said "the weakened value of the pound" is affecting the import cost of some of its materials. A Walkers spokesman told the Press Association that a 32g standard bag was set to increase from 50p to 55p, and the larger grab bag from 75p to 80p. Getty 6/8 Marmite Tesco removed Marmite and other Unilever household brand from its website last October, after the manufacturer tried to raise its prices by about 10 per cent owing to sterling’s slump. Tesco and Unilever resolved their argument, but the price of Marmite has increased in UK supermarkets with the grocer reporting a 250g jar of Marmite will now cost Morrisons’ customers £2.64 - an increase of 12.5 per cent. Rex 7/8 Toblerone Toblerone came under fire in November after it increased the space between the distinctive triangles of its bars. Mondelez International, the company which makes the product, said the change was made due to price rises in recent months. Pixabay 8/8 Maltesers Maltesers, billed as the “lighter way to enjoy chocolate”, have also shrunk in size. Mars, which owns the brand, has reduced its pouch weight by 15 per cent. Mars said rising costs mean it had to make the unenviable decision between increasing its prices or reducing the weight of its Malteser packs. iStockphoto 1/8 Weetabix Chief executive of Weetabix Giles Turrell has warned that the price of one of the nation’s favourite breakfast are likely to go up this year by low-single digits in percentage terms. Reuters 2/8 Nescafé The cost of a 100g jar of Nescafé Original at Sainsbury’s has gone up 40p from £2.75 to £3.15 – a 14 per cent rise—since the Brexit vote. PA 3/8 Freddo When contacted by The Independent this month, a Mondelez spokesperson declined to discuss specific brands but confirmed that there would be "selective" price increases across its range despite the American multi-national confectionery giant reporting profits of $548m (£450m) in its last three-month financial period. Mondelez, which bought Cadbury in 2010, said rising commodity costs combined with the slump in the value of the pound had made its products more expensive to make. Cadbury 4/8 Mr Kipling cakes Premier Foods, the maker of Mr Kipling and Bisto gravy, said that it was considering price rises on a case-by-case basis Reuters 5/8 Walkers Crisps Walkers, owned by US giant PepsiCo, said "the weakened value of the pound" is affecting the import cost of some of its materials. A Walkers spokesman told the Press Association that a 32g standard bag was set to increase from 50p to 55p, and the larger grab bag from 75p to 80p. Getty 6/8 Marmite Tesco removed Marmite and other Unilever household brand from its website last October, after the manufacturer tried to raise its prices by about 10 per cent owing to sterling’s slump. Tesco and Unilever resolved their argument, but the price of Marmite has increased in UK supermarkets with the grocer reporting a 250g jar of Marmite will now cost Morrisons’ customers £2.64 - an increase of 12.5 per cent. Rex 7/8 Toblerone Toblerone came under fire in November after it increased the space between the distinctive triangles of its bars. Mondelez International, the company which makes the product, said the change was made due to price rises in recent months. Pixabay 8/8 Maltesers Maltesers, billed as the “lighter way to enjoy chocolate”, have also shrunk in size. Mars, which owns the brand, has reduced its pouch weight by 15 per cent. Mars said rising costs mean it had to make the unenviable decision between increasing its prices or reducing the weight of its Malteser packs. iStockphoto

Prime Minister Theresa May has stressed her commitment to a hard Brexit and scores of banks have already taken action to relocate parts of their business in order to be able to keep servicing clients.

Frankfurt, which is home to the European Central Bank, has emerged as one of the favoured options for those looking to shift jobs away from London.

Goldman Sachs and Morgan Stanley are reportedly already scouting for office space in the city.

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