Brexit hits banks, scares off M&As

Brexit is the last thing investment banks needed.

Friday's currency swoons and stock rout - triggered by UK voters' surprise decision to withdraw from the European Union - herald even harder times for securities firms already struggling to improve earnings. While some trading desks made money in the initial turmoil, continued market volatility in months ahead poses danger to trading profits. Companies that hire banks to advise on takeovers and raise money face years of uncertainty as Britain negotiates new international ties.

Analysts on both sides of the Atlantic cut earnings estimates for the biggest investment banks on the expectation that securities sales and major deals will be thwarted by economic and political uncertainty and currency swings. Fees from that business are likely to "tank," dropping more than 30 percent this year at European banks, Sanford C Bernstein analyst Chirantan Barua wrote.