After a modestly stronger open, which saw sterling rebound to just under 1.35, the British currency has taken another sharp leg lower in recent trading tumbling another 3%, to a low of 1.3224 – taking out Friday’s post-vote lows when the currency plunged over 8% – and dropping to fresh 31 year lows, as it remains under heavy selling pressure as of this moment.
- BARCLAYS HALTED IN LONDON ON VOLATILITY AFTER SHRS FALL 11.5%
- RBS HALTED IN LONDON ON VOLATILITY AFTER SHRS FALL 14.2%
Not helping the local banks was a double-downgrade of Barclays by Jefferies to underperform from buy as its IB operations are too exposed to downside risk on capital and earnings, Jefferies said. The mid-market US bank cut its BARC PT to 115p vs 287p noting that Brexit outcome “changes everything”:
- Management was already busy with Africa disposal, non-core asset reductions, trying to boost returns, capital ratios
- Brexit calls Barclays’s IB into question
- Outlook for lower rates, higher impairments, RWA density put pressure on profit
- Sees Barclays earnings power “substantially diminished”
- Sees Barclays 2018 statutory EPS at “miserly” 16.4p
It’s not just these two banks: the entire UK banking sector is down 13% today, after plunging 17% on Friday, meaning in just two days UK banks have lost nearly a third of their market cap.
