- Google Finance
US bank stocks are getting clobbered after Britain’s vote to leave the European Union threw global markets into turmoil and UK banks plunged.
Citigroup is down more than 7%, and Bank of America has dropped about 5.5% as of 10:15 a.m. in New York. Goldman Sachs is also down just over 5%, and JPMorgan Chase is down about 4%, while Wells Fargo has dropped just over 2%.
The Euro Stoxx Banks index was off more than 16% in the wake of the vote, with Europe’s biggest lenders logging their biggest decline on record. The S&P 500 Futures is down 2.3%, and European and Asian benchmarks are all sharply lower.
In London, banking stocks bore the brunt of the market’s drop. Soon after the open Friday, all of Britain’s biggest financial firms plunged, with losses of as much as 30% for the country’s most important banks. Since then, after soothing comments from Bank of England Governor Mark Carney, bank stocks have rebounded a bit.
Here’s Barclays around midday in London:
For the US banks, the Brexit vote creates two problems. Uncertainty around the effects of the decision as the UK begins a complicated process of removing itself from the EU could hit their trading businesses. This volatility could also have broader economic implications.
“Even for countries with a relatively low trade exposure, heightened volatility and uncertainty are likely to lead to weaker growth through delayed investment and consumer spending and weaker employment,” HSBC economists wrote in a note Friday.
At the same time, London is a key financial center and an overseas hub for the big Wall Street firms.
JPMorgan’s CEO Jamie Dimon wrote in a memo to staff that the bank has 16,000 employees in London and that the bank might have to make changes to its “European legal entity structure and the location of some roles.”
Even UK-based banks will have to address changing rules over employment. EU membership has meant that UK companies could employ citizens of other European nations without restriction. Barclays CEO Jes Staley addressed the concerns of these employees in a memo:
“For those of you who are not UK nationals, but based in the UK, I know that the vote to leave may also raise questions about your own future. I do not pretend to have the answers but I know that our people are the lifeblood of Barclays, regardless of where they’re from, so we will do all we can to support you.”