It has been six months since the notorious Brexit vote put the United Kingdom on a course for divorce from the European Union. In that time, fellow nationalist Donald Trump has been elected to the US Presidency, mirroring the ascendency of Boris Johnson in British social influence. While there have been numerous effects following Brexit, few were so extreme as the impact on banking stock prices, which uniformly plummeted in the minutes and hours following the voting results announcement. For people not directly invested in British banking, one may wonder what has become of those stocks price since?
The results have been something of a mixed bag. While there could be endless analysis of all the British banks affected, we’ll focus on two in particular: Lloyds and Barclays, specifically because of their ongoing troubles with the PPI claims scandal. Many investors want to know, is now the time to buy, hold tight, or jump ship with regard to these bank stocks.
Lloyds: Lloyds Banking Group saw company share values cut nearly in half immediately following the Brexit vote. Shareholders were rightfully worried at the results of secession from the European Union, and its effects on global and Euro-centric banks residing in London. The vote came at a time when Lloyds was already reeling from their involvement in the Payment Protection Insurance scandal, through which insurance was fraudulently sold to thousands of unknowing British borrowers. Lloyds may have already paid back more than a billion, and with more than two years left before the PPI claims deadline, that number is sure to rise.
Lloyd’s share price has not nearly recovered to the heights it had reached immediately before the Brexit announcement. But this isn’t necessary bad news for people considering making a purchase. It is likely that Lloyds will rebound and recover in the coming months and years, making a stock at the current prices something of a discount. For people who already held Lloyds stock, it may be time to hold, waiting out these trying times, and enjoying better prices once the Brexit transition is more ironed out.
Barclays: Barclays saw a similar drop in stock prices following the vote, but their value has actually returned and, at times, surpassed, the value it saw before the Brexit vote. Mired in the same PPI scandal that Lloyds is, Barclays is no doubt looking forward to the 2019 claims deadline, after shelling out hundreds of millions to claimants around the country. When it is time to finally put this public relations disaster, along with the choppy Brexit waters, behind the company, new heights could be reached in share prices. But for now, it is unlikely that growth will be impressive in the coming months, so people interested in shares might be cautious.
In the end, there is no way to know how these prices are going to change in the coming months, especially with the election of Donald Trump to the US Presidency. Whatever happens, these banks will endure for many years to come, but at what price we will have to wait to discover.
Mixed Banking Stock Recovery 6 Months After Brexit