European Bank Stocks Set For Worst Two-Day Performance Ever
European bank stocks are set for their worst two-day loss ever in the post-Brexit fallout. In the UK, shares of Royal Bank of Scotland and Barclays both fell more than 10 percent, while Credit Suisse shares hit another record low.
Dave Lutz of Jones Trading notes:
S&P notes the $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987
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Analysts at Deutsche Bank opine:
The recent decline of the EA credit impulse has mostly been driven by Spain (see Figure 2). Moreover, we believe that the Italian Referendum in October poses a significant risk to Euro area stability with the recent local elections underlining the significant rise of Euro-skepticism. Separately, we believe that impact on investor and market confidence is likely to weigh on capital markets revenues notably asset & wealth management, equities and primary, with a notable impact on the major Swiss banks. By contrast, the likes of BNP Paribas and CASA have greater bias to Macro-driven FICC revenues which are likely to be more resilient.
Recent monetary stimulus has been aimed at driving growth through bank lending (TLTRO, FLS) with investors hoping that more negative deposit rates in Europe and base rate cuts in the UK could be avoided. But with UK growth likely to drop sharply this is a luxury the BoE will be unable to afford in our view. Adding even more liquidity through central bank lending appears to be adding little: note the disappointingly small E31bn net take-up of the first TLTRO II auction last week. Unless we see a run on bank deposits – which is not our expectation – excess liquidity will continue to build at world central banks
See the following visualizations which show recent European Bank performance.
Deutsche Bank, Credit Suisse, Barclays, RBS Stock Price Percent Change Trailing Month
Deutsche Bank N (DB) Stock Price
Cs Group Sp Adr (CS) Stock Price
Barclays Plc Sp Adr (BCS) Stock Price
Ryl Bnk Scot Sp Adr (RBS) Stock Price
European Bank Stocks