European and UK investment banks are highly exposed to Britain's exit from the EU, analysts at Citi said on Monday, with sizeable operations in London likely to be reviewed.

Industry revenues are also set to be subdued, especially M&A and new issuance, given a prolonged period of heightened UK & EU uncertainty.

“We make no changes to recommendations, but cut target prices by 8-12%, due to a higher cost of equity assumption and 2017/18 earnings per share cuts of 8-13%,” said Citi analyst Andrew Coombs.

“The earnings cuts are mainly driven by lower capital market revenues, especially in primary."

Meanwhile UK asset managers fell 10%-18% on Friday, sterling by almost 9% against the US dollar.

"A great deal of pain in one session," writes Citi analyst Haley A Tam. "But the impact, in our view, is only just beginning.

“We scale back market return and fund flow forecasts across our stock coverage."

Citi’s changes range from 4%-5% upgrades to 20%+ downgrades, with FX, AuM mix and stickiness the key differentiators.

The bank upgraded Man on significant FX translation benefit (weaker £) and downgraded Henderson.

For UK and EU insurers, Citi’s experts say macro uncertainty will hurt the sector’s capital and earnings.

“The leave vote will lead to a prolonged period of uncertainty, negatively impacting the sector’s performance due to its macro gearing,” said analyst Andrius Budnikas.

Subdued top-line growth and possible fund outflows, pressure on investment income, weakening economic capital positions and FX risks are the top risks.

“Although we believe that this sector will be less impacted than other financials from an operational perspective, in the current environment we prefer the most defensive names.”

Budnikas says he has screened for the following characteristics: strong Solvency II position, low debt leverage, high quality investment portfolios; above average revenue exposure to markets outside UK/EU; a secure dividend outlook.

“Based on our analysis, several stocks still screen well across the sector. We would highlight the following three: Munich Re, RSA and Tryg.”