Brexit, which is an abbreviation of “British exit,” refers to the June 23, 2016 referendum by British voters to exit the European Union. So far, the referendum has shaken global markets, including currencies, causing the British pound to fall to its lowest level in decades. While the local economy will take the biggest hit, many are predicting that Brexit could send shock waves across the U.S. economy.
We asked the leaders of a few of our business units how they see Brexit affecting their industry. Here is what they had to say:
Ray Sperring, executive vice president of TBK Bank, on the commercial real estate market:
Domestic commercial real estate will benefit from the recent Brexit decision for multiple reasons. Globally, the uncertainty will result in slower growth and a reluctance to raise interest rates for an extended amount of time. Domestically, uncertainty in Europe will further cement the U.S.’ position of financial strength, and increase the appeal for foreign investors to invest capital in the U.S., especially in hard assets, and purchase U.S. treasuries. Capital may slow down and a lower demand for space might put a damper on new development, but an extended period of low rates coupled with the perceived relative safety of domestic real estate should bode well for the U.S. real estate market over the next year.
Wess Peterson, senior vice president of Triumph Insurance Group, on the commercial insurance market:
Brexit will impact the insurance industry as it relates to the London market, specifically the underwriters at Lloyd’s. This is a big player in the E&S insurance marketplace and this single market has certain benefits through E.U. membership. The U.K.’s departure from the E.U. creates some volatility that may have multiple impacts on the U.S. market. The regulatory environment and the ability to operate with a larger London market, including all 27 member states of the E.U., may change and limit Lloyd’s in the future.
Jim Allin, senior vice president of Triumph Commercial Finance, on the asset-based lending market:
At this point I do not anticipate any immediate impact. Most of our clients and potential customers do not have international operations. Those that do are generally importing product. If the dollar strengthens as a result of Brexit, there could be a positive impact for those businesses that do import product. Overall, however, I think we are in a wait and see mode without much of an impact.
Posted in Triumph Bancorp