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Categorized | Equities

European bank stocks sliding

Posted on November 17, 2016

Bank stocks are suffering on an otherwise relatively subdued morning for European equity markets.

Royal Bank of Scotland started the morning second from bottom of the FTSE 100, falling as much as 2.5 per cent. Yesterday, James Leigh-Pemberton, head of the vehicle that looks after the UK government’s investments in taxpayer-backed banks, told a committee of MPs that RBS could be hit with a fine as high as $12bn from US authorities. RBS is under investigation by the US Department of Justice over the way it sold mortgage-backed securities in the run-up to the 2008 financial crisis.

The eurozone-wide Euro Stoxx Banks Index opened down 1.4 per cent with every constituent in the red, its worst day since the election.

At publication time:

  • RBS: -1.3 per cent, 205p
  • Lloyds Banking Group: -0.8 per cent, 60p
  • ABN Amro: -2.3 per cent, €20.42
  • Bank of Ireland: -2.8 per cent, €0.21
  • Banco Popular: -2.3 per cent, €0.87
  • Mediobanca: -1 per cent, €6.89

Financial stocks were some of the biggest beneficiaries in the immediate aftermath of Donald Trump’s election victory, encouraged by rising long-term bond yields that help increase margins for lenders.

Bond yields rose to multi-year highs in expectation of higher inflation caused by Donald Trump’s planned fiscal stimulus, but the sell-off has lost some of its momentum this week, with the Bank of Japan’s announcement that it will stick to its yield curve target helping to push yields back down again this morning.