UK banks – including SA’s Investec, which has a primary listing in London – face considerable operational uncertainty after the British people voted in a June referendum to leave the EU. Brexit, as it is known, threatens UK banks’ "passporting" rights. These allow banks to sell products and services across the 27-member EU without having to secure a separate licence for each country. Investec appears to be gearing up to rely less on private banking as its main revenue generator. Business Day reported that its less capital-intensive asset and wealth management units increased their contribution to 39.9% of operating profit for the six months to September, from 34% in the comparable period. The bank said it would focus on "capital-light" business, such as asset management, to improve its return on equity. This strategy may or may not be Brexit-related, but it would make sense in the event of a hard Brexit, in which passporting rights will be forfeited. The bank’s asset management unit...
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