A British vote to leave the European Union would hit large German banks, given their heavy exposure to London, the head of German financial watchdog Bafin said in an interview with German newspaper Tagesspiegel.
Bafin President Felix Hufeld told the newspaper in an article to be published on Monday that he hoped Britons would vote to remain in the European Union.
If not, "the biggest banks would have the biggest problems," the newspaper quoted Hufeld as saying. "They have the most activities in, and with, London," he said.
Hufeld said the European Central Bank planned to closely monitor the situation and the banks themselves had internal groups looking at the possible consequences.
Britons are due to vote in a June 23 referendum on the country's membership in the EU, a choice with far-reaching consequences for politics, the economy, defense and diplomacy in Britain and elsewhere.
British support for leaving the EU stood at 43 percent in a poll published Saturday by The Sunday Times, marginally ahead of the 42 percent who want to remain part of the bloc.
Donald Tusk, president of the European Council, told the German newspaper Bild in a separate interview that it could take seven years to revamp Britain's ties to the European Union.
He said each of the then remaining 27 members of the bloc, and the European Parliament, would have to agree to new terms.
Hufeld told the Tagesspiegel newspaper that Bafin was continuing to look intensively at 11 German banks involved in setting up offshore companies disclosed by the "Panama Papers" investigation, but cautioned it would take some time for the watchdog to reach a conclusion.
Four decades of documents from Panamanian law firm Mossack Fonseca, which specializes in setting up offshore companies, showed widespread usage of those companies by thosewho want to hide their wealth, triggering investigations across the world.
Bafin in May said it had asked banks named in the Panama Papers for all original documents linked to the affair.