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Treasurers Aren’t Hedging Against Brexit Risk

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The U.K. is readying for a historic vote next month to decide whether to remain in the European Union. Policymakers are in a flurry over the impending referendum, with analysts warning about the economic consequences of the move, along with potential upsides.

The latest analysis is that voters are undecided on the matter — up to 14 percent remain undecided, with the rest nearly split down the middle over whether to stay or leave (the most recent poll published on Wednesday (May 18) by YouGov showed 44 percent in favor of remaining in the EU, with 40 percent in favor of leaving).

Corporate treasurers are apparently just as split over the possibility of a Brexit, a report from Greenwich Associates said this week.

Analysts found that more than half of CFOs and corporate treasurers consider it somewhat likely that the U.K. will depart the union.

“Most of these executives think a so-called ‘Brexit’ would be a disorderly and potentially volatile process,” the researchers concluded. “Despite these beliefs, most corporate officers have not taken any actions to minimize the negative effects of a U.K. exit on their companies.”

The survey polled treasurers from 90 Western European corporations last month, from both the U.K. and mainland Europe.

The report highlighted that, despite treasurers’ understanding of the significant implications of a Brexit, few executives have actually implemented security measures for their corporations to safeguard against the impact.

Less than a quarter of those surveyed said they had established hedges to mitigate currency or interest rate volatility, for example, according to Greenwich Associates. Less has been done to secure against backlash of other kinds of risk uneasily calculated, like the possibility of regulatory changes, a decrease in availability of credit and liquidity and the effects on tax policy, the report added.

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Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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