Shares in Europe’s biggest banks were hit by massive losses as markets were at their most vulnerable after the British public voted for the UK to leave the EU.
The FTSE 100 has plunged more than 8 per cent in its biggest opening slump since the financial crisis, wiping £120 billion off the value of the 100 biggest UK companies.
Shares in Royal Bank of Scotland, Lloyds and Barclays fell as much as 30 per cent on opening, before rebounding slightly to trade at 16.7 per cent, 18 per cent and 17 per cent in mid-morning trading.
Bank bosses tried to reassure investors after the results came through.
“Our commitment to British businesses, customers and staff in the UK remains undiminished,” Douglas Flint, HSBC group chairman, said.
“We are today entering a new era for Britain and British business. The work to establish fresh terms of trade with our European and global partners will be complex and time consuming. We will be working tirelessly in the coming weeks and months to help our customers adjust to and prepare for the new environment,” he added.
Jes Staley, chief executive of Barclays, said in a statement that the bank was ready to do “whatever it takes” to serve its clients.
“We are a transatlantic consumer, corporate and investment bank, anchored in the UK and the US. That remains the core of our strength and the Barclays of the future,” he said.
The Bank of England said it was ”monitoring developments closely“ and would take ”all necessary steps“ to support monetary stability.
“At this stage, we cannot fully foresee the consequences, but there’s no doubt that they will be negative on all sides,” said John Cryan Deutsche Bank, chief executive.
In a speech following the results, Mark Carney, the governor of the Bank of England, said some volatility can be expected following the UK's decision to leave the EU.
He sought to reassure investors saying the UK is “well prepared” for the event.
“Some market and economic volatility can be expected as this process unfolds. But we are well prepared for this.
“The Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have been in close contact, including through the night and this morning,” Carney said.
The vote has pummelled the value of the pound to its weakest level against the dollar in more than 31 years and raised the prospect of extreme volatility in other financial markets.
Confirmation that the UK has voted to leave the European Union has sent sterling down to $1.33, depths it has not been plunged since 1985.
The losses of the FTSE 100 were almost as severe as those seen during the financial crisis in 2008, when 8.85 per cent was wiped of global stocks in one day on October 10.
“We’re expecting to see significant and sustained volatility before the market closes,” said Caroline Simmons, deputy head of the UK investment office at UBS Wealth Management.
“There is a heightened risk for the FTSE 250 over the FTSE 100 given its greater exposure to the UK. We could see the FTSE 100 drop towards valuations seen during the 2012 Euro crisis. However, in the months ahead this would be cushioned by an 8 per cent boost to earnings from the weakness in the pound,”
Moritz Kramer, chief ratings officer for S&P, said on Friday morning that the UK's AAA rating was “untenable under the circumstances”.
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