Credit Suisse wise to flaunt Brexit neutrality

April 8, 2016

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

Credit Suisse’s Brexit ban is a display of neutrality its clients should cheer. The Swiss financial group has warned employees against participating in events, marketing or media engagements that could influence the outcome of the UK’s referendum on European Union membership, in an internal memo seen by Breakingviews.

Most multinational investment banks with European headquarters in London should want the UK to stay within the EU. An exit would mean higher short-term costs, and might force them to relocate some staff to another European country, in order to ensure international clients have full access to the single market. Yet overt partisanship could unnerve certain clients who don’t agree. Many hedge funds want out of the EU, for instance.

Nor is it clear the UK electorate cares much for what big finance has to say. JPMorgan and Goldman Sachs’ arguments in favour of Britain remaining probably won’t do much to sway voters. Personal views, such as Credit Suisse Chief Executive Tidjane Thiam’s desire to stick with the status quo, are a different matter. These should be welcome in the interests of open debate, even if they conflict with a company’s official stance. So it helps that Lloyds Banking Group’s Chairman, Norman Blackwell, can be vocal about the benefits of leaving, even if the lender he chairs is neutral.

There’s a more important reason for banks to be wary, however. The proscriptions of Britain’s electoral laws for companies that do not register as political influencers are fuzzy at best, but sanctions for breaches are punitive. Credit Suisse’s fun police – Chief Financial Officer David Mathers and in-house counsel Adrian Ratcliffe – point out in their memo that these could include criminal liability for both the bank and individuals. Bank of America Merrill Lynch has also warned some staff about the ramifications. Other banks are likely to follow.

The necessity of steering clear of such costly consequences has supplanted another motive for Credit Suisse staying out of the debate: Switzerland’s own uncertainty over its relationship with the EU. A Swiss vote in 2014 to cap immigration has meant that the country’s free-trade arrangement with Europe is under review. That is hardly an advertisement for leaving the trading bloc. But the UK’s electoral rules mean that few banks, let alone Credit Suisse, will dare publicly to point that out.

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