Like many multinational companies, Italian engineering business Brembo relies on London to run its finances. The company, based close to the Alps, makes brakes for Formula One cars and motorbikes and sells them in 70 countries. Hundreds of millions of euros pass through its bank accounts each year – and London is the hub for those flows.

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As Britain prepares to leave the European Union, the company says it may now have to shift the centre of its banking operations to Frankfurt. If Brexit happens with little provision for London`s financial services, banks, funds and insurers in London will lose their ability to sell many of their services to European companies.

Such upheavals will hurt not just London, say bankers and businessmen, but Europe as well. Financial firms say such shifts will mean the cost of banking for European companies will have to rise, though it is not clear yet who will pick up the bill – the banks or their clients.

"At the end of the day it will not be a problem for Brembo, but for our bank," said Matteo Tiraboschi, executive vice president of Brembo, in an interview at the company`s headquarters in Bergamo. "We expect to have the same service for the same price."

Brembo`s main bank, Citigroup, declined to comment.

Interviews with scores of senior executives from big British and international banks, lawyers, academics, rating agencies and lobbyists outline some of the dangers for companies and consumers from potentially losing access to London`s markets.

The EU needs London`s money, says Mark Carney, governor of the Bank of England. He calls Britain "Europe`s investment banker" and says half of all the debt and equity issued by the EU involves financial institutions in Britain.

Rewiring businesses will be expensive, though estimates vary widely. Investment banks that set up new European outposts to retain access to the EU`s single market may see their EU costs rise by between 8 and 22 percent, according to one study by Boston Consulting Group. A separate study by JP Morgan estimates that eight big U.S. and European banks face a combined bill of $7.5 billion over the next five years if they have to move capital markets operations out of London as a result of Brexit. Such costs would equate to an average 2 percent of the banks` global annual expenses, JP Morgan said.

Banks say most of those extra costs will end up being paid by customers.

"If the cost of production goes up, ultimately a lot of our costs will get passed on to the client base," said Richard Gnodde, chief executive of the European arm of Goldman Sachs. "As soon as you start to fragment pools of liquidity or fragment capital bases, it becomes less efficient, the costs can go up."

UK-based financial firms are trying to shift some of their operations to Europe to ensure they can still work for EU clients, but warn such a rearrangement of the region`s financial architecture could threaten economic stability not only in Britain but also in Europe because so much European money flows through London. European countries, particularly France and Germany, don`t share these concerns, viewing Brexit as an opportunity to steal large swathes of business away from Britain and build up their own financial centres.

Britain alone accounts for 5.4 percent of global stock markets by value, according to Reuters data. Valdis Dombrovskis, the EU financial services chief, said the EU will still account for 15 percent of global stock markets by value without Britain, and that measures were being taken to strengthen its capital markets. But he added: "Fragmentation is preventing our financial services sector from realising its full potential."

Industry figures have similar concerns. Jean-Louis Laurens, a former senior Rothschild banker and now ambassador for the French asset management lobby, told Reuters: "If London is broken into pieces then it is not going to be as efficient. Both Europe and Britain are going to lose from this."MONEY MACHINE

London is currently home to the world`s largest number of banks and hosts the largest commercial insurance market. About six trillion euros ($6.8 trillion), or 37 percent, of Europe`s financial assets are managed in the UK capital, almost twice the amount of its nearest rival, Paris. And London dominates Europe`s 5.2 trillion euro investment banking industry.

London`s markets insure French nuclear reactors and Greek ships. German carmakers borrow money for expansion. Dutch pensioners invest their savings.

Britain has the largest foreign exchange market and the second largest derivatives market in the world, accounting for just under 40 percent of the world`s dealings in those markets, while Paris, London`s nearest EU rival, handles under 5 percent, according to the Bank for International Settlements.

Each year, euro, yen and dollar trades worth about a combined $869 trillion happen in London - more than in all the euro zone countries combined - according to the City of London Corporation.

Barclays Chairman John McFarlane told Reuters that a bad trade deal between Britain and the EU risks harming the international economy, and that some banks may decide to abandon some lines of business altogether because they will be too expensive.

"Brexit will put a spotlight on the economic attractiveness of activities you are moving," he said. "Everybody will say, `If you move, is it worth it financially?`"

Bankers say a number of areas are likely to be affected when Britain leaves the EU. The first is Europe`s ability to sell sovereign debt. At present, when a country, say Portugal or Greece, needs to sell debt to keep its hospitals or schools running, it will tap the bond markets, arranged by banks primarily in London. London-based firms are currently responsible for trading about 70 percent of sovereign debt in Europe, according to bankers.

But some banks are already withdrawing from arranging the bond sales because it is unprofitable. In the first quarter of the year five banks stopped being primary dealers in various European country bonds, Reuters reported in January.

The chief executive of one of Britain`s largest banks and one of the largest underwriters of European sovereign debt told Reuters the European Central Bank called him asking him not to abandon selling European debt because of Brexit. "They (EU countries) cannot be shut out from London`s capital markets," he said. "It`s suicide."

The ECB declined to comment.

A second area that may suffer is the selling of derivatives for companies to buy protection against swings in the U.S. dollar or spikes in the price of oil. Bankers say rivals to London will offer a smaller array of products and at a higher cost because there will be fewer banks offering these services.

A third area likely to be affected is the clearing of derivatives denominated in euros, an activity that London dominates. EU policymakers want such clearing, which ensures the safe completion of a trade, to be shifted to the euro zone after Brexit. Financiers say that would bump up trading costs for continental customers that deal in a variety of currencies because they will have to route trades through multiple clearing houses, requiring them to post more collateral to back those trades.

The Futures Industry Association, a global derivatives industry body, says forcing a shift in euro clearing would increase the amount of cash needed to back trades by about $80 billion. German clearing house Eurex, which stands to gain from a shift, said the increase would be a far more modest $3 billion to $9 billion.

The global head of foreign exchange markets at one of the world`s largest banks said if the amount of cash required to back trades went up as much as $80 billion – nearly a doubling of the current amount - then "it`s going to stop the market."

While bankers say it is hard to estimate how much extra it will cost a European company to borrow without direct access to London`s markets, the Association for Financial Markets in Europe said in a report early this month that European customers are being overly optimistic if they think lenders will pick up the bill.

The report said for companies similar in size to Brembo "any increase in the cost of debt funding and derivatives would therefore have a material impact on the business, making it less competitive."

Brembo`s Tiraboschi disagreed. "As far as Brembo is concerned, we do not have indications for a growth in financing costs linked to Brexit," he said.REALITY CHECK

Last autumn, the British government set about persuading Europe of the risks the EU faces if London`s position as a financial centre is damaged. A research paper by Ernst