zeb.market flash (Issue 18 – July 2016)

Key Topics

I. State of the banking industry

  • The Brexit decision on June 23rd discontinued the positive trend of the first two months of the second quarter in 2016
  • While banks from BRICS and the US showed a positive TSR, European banks ended Q2 with a loss of
    8.2% on average

II. Economic environment and key banking drivers

  • Persistent low inflation rates and economic uncertainty support the low interest rate policy—money and capital market rates decreased further
  • The Brexit decision shows its first impact leading to a decline of the British pound
  • Reported figures from Western Europe and BRICS banks showed solid profitability in the first quarter of the year, while US banks reported decreasing results for the fourth time in a row but still remain on a higher level than European banks

III. Brexit consequences for the European banking industry

  • The Brexit decision caught the capital markets on the wrong foot—European banks were hit hard
  • Global and large European banks have to deal with market uncertainty and essential issues regarding fundamental changes of legal entity structures and the operating model

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