Banks in the U.K. have a message for employees: Don’t mention the Brexit.
Starting Friday the referendum over whether the U.K. should stay in the European Union is officially under way. Companies not registered as official campaigners can be slapped with fines, or face criminal punishment, if they break strict spending limits of £10,000, or about $14,000, promoting their views.
Across London, bank-compliance teams have scrambled into action. Bank-research departments have clamped down on staff making notes that analyze “Brexit”—a British exit from the EU—available to journalists. Several are asking speakers at events to read out a disclosure stating the bank isn't taking sides in the referendum, before making a speech or doing a question-and-answer session. One big U.S. bank is considering whether to invite extra politicians to dinners to ensure both sides of the debate are represented.

Bank of England Signals Uncertainty Over ‘Brexit’ as It Holds Rates (April 14)
U.K. Chooses Groups to Represent Brexit Campaigns (April 13)
Who Loses the Most From Brexit? Try Goldman Sachs (April 11)
Banks Wrestle With Brexit Risk (Feb. 22)

“It is important that we do not facilitate campaign activity that advocates voting one way or another,” said Barclays Chairman John McFarlane in a recent note to employees.
U.K. law states that an organization can spend up to £10,000 promoting its views on the referendum; the same limit applies to individuals. After that it must register as a campaigner. No banks have done so. The lockdown is in place until June 23, the day of the vote.

According to the rules, offering Brexit advice to clients is fine. So are research reports. But “if you promote the report more widely, for example on your website or to the media, this suggests that your intention is to influence the wider voting public,” the U.K.’s Electoral Commission’s guidance says. Any research that compares two outcomes or uses positive or negative language “makes the spending more likely to fall within the spending rules,” the guidance adds.
Having sucked up billions of fines for misconduct, banks don’t want to step out of line. But the guidance presents a challenge. Fearing the ramifications for their businesses, many banks came out in favor of the U.K. staying in the EU. Being able to publish research outlining the potential economic hit the U.K. would suffer from Brexit is a major weapon in banks’ lobbying arsenal.
Their early efforts made them the focus of pro-Brexit campaigners’ ire. “This is all about the big banks and the establishment protecting their interests,” UK Independence Party leader Nigel Farage said in a statement earlier in the week when the International Monetary Fund warned on Brexit.
In the days leading up to the official start of the campaign, a deluge of notes on the referendum was published. On Thursday, Lloyds Banking Group PLC beat the deadline, announcing that its board had concluded that “the referendum and a vote to leave the EU are likely to cause economic uncertainty and potential volatility in the short term.”
Others say they won’t be silenced. The City of London Corporation, a body that promotes the U.K. capital as a leading global financial center, will continue to argue against Brexit. “Both the Lord Mayor and Policy Chairman will continue to speak up for the City as to why we should remain in the EU,” a spokesman said. “We are not currently official campaigners.”
Write to Max Colchester at max.colchester@wsj.com

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Friday, April 15, 2016

Bankers Told to Hush on Brexit

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Don't Mention It: Bankers Told to Hush on Brexit

Don’t Mention It: Bankers Told to Hush on Brexit

Companies not registered as official referendum campaigners can be slapped with fines if they break strict spending limits

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