AIB staff bracing for market volatility around Brexit vote

AIB staff have been warned to brace themselves for an intense period of market volatility in and around the UK's vote on EU membership on Thursday.

In a memo sent to staff by chairman Richard Pym, seen by The Irish Times, employees were told the decision will have a profound economic effect on the UK and Ireland.

“As a bank we consider economic risk and the risks arising from a Brexit are extremely high,” he wrote, while noting it was impossible to predict the possible outcomes.

“Financial markets react badly to uncertainty and businesses and households hold back on investment. It is widely anticipated that sterling will fall and UK policymakers will have a difficult set of issues to address,” Mr Pym said.

In the event of Brexit, he said the UK government faced a tricky decision on whether to reduce interest rates to offset a slowing domestic economy or increase rates to defend the currency and to offset domestic inflation arising from the higher costs of imports.

AIB’s foreign exchange department here will be manned on a 24-hour basis during the vote and subsequent count, while senior staff are expected to work until at least midnight on Thursday to ensure the bank can react to the result.

In his memo, Mr Pym said AIB ’s board strongly supported the view of both the Irish and UK governments that the Ireland-Britain economic relationship and the EU as a whole were best-served by the UK’s continuing presence.

Instant effect

With over €1 billion of trade each week between the two countries, he said the economic fallout from an exit would immediately impact Ireland.

He noted the negotiation of new trade agreements with the UK would take “a very long time to agree” as they required national parliaments to legislate across the EU.

“As an example of just one of many problems to be overcome, the UK has not negotiated a trade agreement since accession in 1973 and it has been estimated will need to hire 500 lawyers to join the civil service to form the basis of the British negotiating team,” Mr Pym said.

"The negotiations could take a decade to conclude." The International Monetary Fund warned Britain faced a period of economic contraction if it voted to leave the EU.