Lack of services agreement in trade deal

[MrFoolish]

I understand the UK-EU trade deal does not include services. Can anyone please explain the implications for UK listed companies? For example, I hold shares in L&G. How would their ability to sell financial products (funds, pensions, etc.) to EU citizens be affected?

Thanks.

[johnhemming]

Generally they would have to do this through a subsidiary now. That is mainly an issue for the UK government as any profits would be taxed first in the subsidiary.

[Dod101]

As has been said elsewhere, many of the financial services companies have established offices in say Dublin or Frankfurt to cope with this. I think the fact that there has been no great gnashing of the teeth means that most of them expected this and are reasonably well prepared for it.

Dod

[johnhemming]

I did a Q&A session with a lot of stockbrokers in 2016 about these sort of issues and the EU. Everyone who has any substantial amount of international business will have done something to look at these issues.

[Alaric]

For example, I hold shares in L&G. How would their ability to sell financial products (funds, pensions, etc.) to EU citizens be affected?

Local regulation and taxation can mean that personal financial products are nationally distinct. As a consequence, local subsidiaries or joint ventures were usually the approach to entering EU markets.

[UncleEbenezer]

I understand the UK-EU trade deal does not include services. Can anyone please explain the implications for UK listed companies? For example, I hold shares in L&G. How would their ability to sell financial products (funds, pensions, etc.) to EU citizens be affected?

Thanks.

For a company the size of L&G, they surely already have local operations in many jurisdictions.

What strikes me is that this might raise the barriers to entry and to growth for a small company, where setting up a foreign operation and complying with another set of rules and regulations is a proportionally much bigger overhead. This is one of the main ideas Mrs Thatcher had in mind when she persuaded her colleagues around Europe to adopt a Single Market for goods and services.

In some senses - at least the zero-sum view - this could favour incumbents like L&G. Making it more difficult for an innovator to grow could drive would-be disruptors into collaboration with established bigcos, or tip the balance from organic growth to seeking a buyer. The likes of L&G are the Pfizer to an innovator's Biontech.

[TUK020]

I understand the UK-EU trade deal does not include services. Can anyone please explain the implications for UK listed companies? For example, I hold shares in L&G. How would their ability to sell financial products (funds, pensions, etc.) to EU citizens be affected?

Thanks.

They have to set up a subsidiary in the EU to do business there.
However, their fishing catch has been preserved, and they can still import German motor cars.
Another fine victory!

[EthicsGradient]

Banks did not do well on the first day of trading:

In the first day of trading since markets closed on Christmas Eve, the FTSE 100 ended up 1.6% at 6,603 points.

It was the Footsie's best day since 9 November, and only falls in bank shares stopped the index from rising further.
...
On the FTSE 100, international companies such as Unilever and Diageo gave the biggest boost to the index, while drugmakers AstraZeneca and GlaxoSmithKline also added to the gains.

"The [Brexit trade] deal should see sentiment towards the FTSE indices recover just as the dividend payout ratio improves, vaccines are rolled out and overseas revenues accelerate. We lift UK equities to Bullish," analysts at brokerage Jefferies wrote in a note.

Banks accounted for three of the five biggest fallers on the FTSE 100, with worst-hit Lloyds suffering a near 5% drop.

One analyst, Shanti Keleman from Brown Shipley, put the falling UK bank shares down to "no agreement on financial services equivalency in the Brexit deal".

https://www.bbc.co.uk/news/business-55473988

[johnhemming]

One analyst, Shanti Keleman from Brown Shipley, put the falling UK bank shares down to "no agreement on financial services equivalency in the Brexit deal".

I am not sure we were expecting this anyway.

I do accept that this seems to be the story and hence is probably therefore the cause of yesterday's drop.

Banks are up a teeny bit today.

[dealtn]

Banks did not do well on the first day of trading:

In the first day of trading since markets closed on Christmas Eve, the FTSE 100 ended up 1.6% at 6,603 points.

It was the Footsie's best day since 9 November, and only falls in bank shares stopped the index from rising further.
...
On the FTSE 100, international companies such as Unilever and Diageo gave the biggest boost to the index, while drugmakers AstraZeneca and GlaxoSmithKline also added to the gains.

"The [Brexit trade] deal should see sentiment towards the FTSE indices recover just as the dividend payout ratio improves, vaccines are rolled out and overseas revenues accelerate. We lift UK equities to Bullish," analysts at brokerage Jefferies wrote in a note.

Banks accounted for three of the five biggest fallers on the FTSE 100, with worst-hit Lloyds suffering a near 5% drop.

One analyst, Shanti Keleman from Brown Shipley, put the falling UK bank shares down to "no agreement on financial services equivalency in the Brexit deal".

https://www.bbc.co.uk/news/business-55473988

Or alternatively Bank shares significantly outperformed the market on Christmas Eve, with the likes of Lloyds up from below 35p to nearly 40p, approximately 15%. On the first day of trading after the Christmas holidays bank shares failed to hold all of these gains drifting 5% lower as some of those profits were taken despite a modestly higher FTSE 100 Index.

Looking at a single day's market moves is ridiculous, and attributing them in isolation to a single cause even more so.

It's noise at best.