Bank stocks hit again post Brexit
Investors hammered bank British and U.S. bank stocks again Monday, amid continuing economic and political uncertainty stemming from the United Kingdom's surprise vote to leave the European Union.
British bank shares took the worst beating, though some ended the day up slightly from earlier in the session.
Shares of Barclays (BCS) closed down nearly 21% at $7.03, marking a second consecutive trading day of double-digit losses for the stock. The new drop deepened the 20.5% plunge Barclays shares suffered in U.S. trading Friday after the surprise Brexit referendum outcome became known.
Investors also remained bearish on Royal Bank of Scotland (RBS), sending the bank's shares down 13.6% to $4.69 close. The new drop followed a 27.5% plummet in the stock on Friday.
Major banks pounded by Brexit outcome
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Shares of Lloyds Banking Group (LYG) similarly fell 16.5% to a $2.78 close, adding to their nearly 23.3% drop in U.S. trading Friday.
Shares of HSBC Holdings (HSBC) fared comparatively better, closing down 4.2% at $29.38.
The banks' new declines came hours after Chancellor of the Exchequer George Osborne in London said capital requirements for British banks were "ten times what they were," but acknowledged that financial market volatility would likely continue.
Banking analysts at S&P Global Market Intelligence on Friday downgraded recommendations on Barclays shares to hold, and Royal Bank of Scotland stock to sell, but issued a buy recommendation for Lloyds Banking Group. London-based senior research manager Julien Jarmoszko said Monday the changes were based on financial market stress, widening credit spreads and concern the banks could face impact from a potential downturn Britain's housing sector.
"We're in a period of high negative noise now," said Jarmoszko. "In that atmosphere, investors can act first and ask questions afterward."
U.S. bank stocks also declined Monday, but not as far as their British counterparts, nor as badly as on Friday.
Shares of JPMorgan Chase (JPM) closed down 3.3% at $57.61. The New York-based global bank's stock closed down 6.95% on Friday.
Bank of America (BAC) shares fell 6.3% to a $12.18 close, adding to their 7.4% drop on Friday. U.S. investors sent Citigroup (C) shares 4.5% lower to close at $38.48, deepening their 9.36% plunge in Friday trading. And shares of Wells Fargo (WFC) closed down almost 1.5% at $45.01, after they closed nearly 4.6% lower on Friday.
Major U.S. investment banks also suffered a second straight day of post-Brexit losses.
Shares of Goldman Sachs (GS) closed nearly 1.7% lower at $139.51. Similarly, shares of Morgan Stanley (MS) fell 3.7% to close at $23.61. The two banks' stocks closed down 7.1% and nearly 10.2%, respectively, in Friday trading.
Bank of America, Citigroup and Morgan Stanley are among large U.S. banks whose stocks have experienced rising levels of volatility compared with the market as a whole, Keefe Bruyette & Woods said in a Friday research note. JPMorgan and Wells Fargo number among large banks with the lowest volatility, the report said.
Noting that U.S. banks all passed the Federal Reserve Board's annual financial stress tests last week, the report said the strong balance sheets found in the tests could create an opportunity for investors on the long side "when global events stabilize."
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc