OREANDA-NEWS. The UK's vote to leave the European Union will add to revenue challenges faced by European global trading and universal banks (GTUBs), Fitch Ratings says.

We expect increased economic uncertainty to lower transaction volumes in the medium term. But in the short term, higher market volatility and activity in certain asset classes, notably in foreign exchange, are likely to bolster sales and trading revenue for all European GTUBs in 2Q16.

Underwriting and advisory revenue is likely to be depressed as corporates postpone issuance and acquisitions until capital markets are more favourable and businesses adjust to the new operating environment. Subdued issuance and corporate actions could affect trading volumes, putting further pressure on profitability.

Credit Suisse Group and Deutsche Bank are most reliant on capital markets activities, with sales, trading, underwriting and advisory revenue at about 50% and 40% of total group revenue, respectively. These two banks and Barclays are already undergoing substantial restructuring, cutting costs and reallocating resources as they adapt to more challenging capital markets and changed capital requirements. The Brexit vote has also complicated staffing decisions.

Wealth-management operations, key to the two Swiss GTUBs' business models, are likely to feel less direct effects. The EU referendum adds to the uncertainty about global economic growth, which will affect net new money inflows and transaction fees. Prospects for wealth management are particularly sensitive to economic growth in Asia-Pacific, and so have suffered moderately from China's slowdown.