UK banks tumble as gilt yields hit highest since 1998 and budget jitters mount
EWU•UK bank stocks fell sharply Thursday as British 30-year borrowing costs reached their highest since 1998 and concerns mounted ahead of this month’s budget. NatWest fell 5.2%, HSBC 4.3%, Barclays nearly 4% and Lloyds 4.4%; the FTSE 350 banks index dropped 4.1%.
1. Banks fall sharply
UK bank stocks fell across the board on Thursday as a sell-off in government bonds drove yields to fresh multi-year highs. The FTSE 350 banks index fell 4.1%, while NatWest shares lost 5.2%, HSBC 4.3%, Lloyds 4.4% and Barclays nearly 4%.
2. Budget tax concerns
The declines gathered pace after a report said the heads of major British lenders, including Barclays, HSBC and Lloyds, had been summoned to meet finance minister John Healey next week. Expectations were building for possible bank taxes in the Autumn Budget on October 28; the Treasury declined to comment.
