Brexit could trigger French bank pullback from London - French central bank

PARIS (Reuters) - French banks may pull back from London if Britons vote to leave the European Union in a referendum this week, the French central bank said in its biannual risk report on Monday.

The referendum will shape Britain's role in world trade and affairs, and the French central bank said that both the Bank of England and the European Central Bank were equipped to manage an expected spike in financial market volatility if the Leave campaign wins.

Further out French banks could bring back to France some of their activities currently based in London like project and shipping finance as well as market operations like derivatives.

But a Brexit could also prompt a deeper rethinking of French banks' exposure to British counterparties, which the Bank of France put at $228 billion as of the end of 2015, of which $102 billion was towards British banks.

"If Britain leaves the EU, French banks could redirect part of their operations to European counterparties," the Bank of France said.

"This effect could be boosted if the subsidiaries of third country banks in London (especially from the United States) move to other financial European centres," it added.

Though London's pre-eminence for clearing financial transactions is unlikely to collapse in the case of Brexit, clearing of euro-denominated deals could be repatriated to the euro zone, the Bank of France said.

European financial centres, such as Dublin, Frankfurt, Luxembourg or Paris, will be anxious to attract as big a share as possible of the UK's financial industry if Britain votes 'out' on June 23.

(Reporting by Leigh Thomas; editing by Richard Lough)