Britain's upstart lenders face Brexit shock

London

INVESTORS contemplating how London could look outside the European Union have already identified some potential victims: fast-growing British lenders that might have to face their first economic downturn as public companies.

Billionaire Richard Branson's Virgin Money Holdings UK Plc and small lenders like OneSavings Bank Plc have ridden the recovering economy of recent years to help them win market share from the nation's entrenched players. With the UK Treasury and some analysts predicting that a British vote to leave the EU on June 23 could cause the worst drop in house prices since the financial crisis, the banks could see their progress reversed as they're saddled with bad debts.

"I'm still hoping common sense will prevail and we'll remain in the European Union," OneSavings Bank chief executive officer Andy Golding said by telephone. "I'm not necessarily certain if anyone knows what the result will be of an exit. But I am pretty certain it creates a slowdown in economic growth and creates less demand for new propert…