Sunday 26 June 2016 2:56 pm

Hold onto your hats: Banks in for a bumpy ride following the Brexit vote

The banking sector is most likely bracing itself for a beating following last Friday's EU referendum result.

The UK's decision to leave the EU places the passporting rules – which essentially allow UK banks to operate throughout the European Economic Area without restrictions – in doubt, which could ultimately result in fewer bankers on the streets of London

A statement from the British Bankers' Association (BBA) on Friday pointed out that reaching a deal on passporting would take some time, so it would be business as usual for bankers for the foreseeable future. 

"A significant amount of contingency planning has already been undertaken and the industry is very well prepared, and have increased capital and liquidity," said Anthony Browne, BBA chief executive. "Banks will now assess what the result means for their customers and staff in the long term."

Read more: Update: A petition for a second EU referendum now has over 3m signatures

However, that hasn't stopped some of banking's biggest names from looking overseas. As far back as February, banking giant HSBC was warning that it could move 1,000 staff to its Paris office in the event of Brexit, depending on what kind of a deal could be negotiated over passporting.

JP Morgan Chase voiced similar concerns when the vote was less than a month away, with chief executive Jamie Dimon forewarning that losing passporting rights was a "realistic outcome" and adding: "If the UK leaves the EU, we may have no choice but to reorganise our business model here. Brexit could mean fewer JP Morgan jobs in the UK and more jobs in Europe."

Investors seem shaky on the banking sector's future, as shares in big banks plummeted when the market opened on Friday morning. Shares in Lloyds opened down 29 per cent, while RBS lost a staggering 34 per cent and Barclays dropped 30 per cent. 

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Banks on the continent have also voiced their dismay at Friday's results. 

"I'm afraid that this is not such a good day for Europe," read a statement from Deutsche Bank’s chief executive John Cryan. "At this stage, we cannot fully foresee the consequences, but there’s no doubt that they will be negative on all sides."

However, Spanish Santander, which is more focused on retail banking, was more optimistic about the future. A statement from Santander group executive chairman Ana Botin read:

Our commitment to British businesses, customers and our people remains as strong as ever. Santander’s unique business model – focused on retail banking – provides us with diversification and stability and is a source of great strength. The group has proved its robustness throughout its history and has paid a dividend to its shareholders consistently for more than 50 years.