The boss of the UK’s largest bank has warned banks and their clients will have to swallow higher costs if Brexit fragments the European financial market.

Lloyds and Barclays among banks taking action due to lack of post-Brexit trade deal.

Britain’s banks took a gloomier view than almost all their European peers in their second quarter earnings, as coronavirus fears, Brexit and low interest rates caused them to bake tougher “worst-case” scenarios into their risk models.

The British Chambers of Commerce has warned that the preparations by its members so far only represented the “tip of the iceberg”.

Dozens of companies have cut jobs, beefed up their European operations or issued warnings on the impact of the UK's departure from the EU.

While Britain braces for its exit from the EU in March 2019, HSBC announced on Monday that seven of its Europe-focused offices will move from London to Paris early next year.

Major banks are preparing to shift parts of their operations away from London as Theresa May is set to trigger Article 50.