>> $168 billion Euros wiped off the value of European bank stocks in just two days. Britain's shock vote to quit the EU battering the sector, Reuter's financial services editor, Rachel Armstrong, says the uncertainty is taking its toll on both sides of the English Channel. Lloyds, which is a very UK focused bank, you think it's not that exposed to Europe that's posted double digit falls today because people are concerned about the economy.
At a wider level, you've seen Italian bank shares fall sharply today. That's because those shares, which are already suffering greatly, they think that the economic problems facing them are going to be even worse, which is going to add to their bad debt problems. And there's just been a general kind of lack of clarity and about what's going to happen to Europe's economy in the coming two years.
And that is what investors don't like, and that is what sanction
].>> Analysts issuing a slue of racing and target cuts on Monday. The warnings subdued earnings growth and higher costs of equity. The city is also worried about losing its prized EU passport if Britain fails to secure access to the block's single market.
>> Currently, banks in the UK, most of them operate on this passporting regime, which means that they can base the majority of their staff, their operations in the UK>> They're regulated primarily by UK regulators, but that gives them the license to operate anywhere else within the European Union.
They don't need to have expensive subsidiaries and hundreds of members of staff in all of the different EU countries. Now, if banks in the UK lose that passport, that means that they will no longer have that free access into the rest of Europe. So, they will need to think about moving operations, setting up new subsidiaries in a country that is a member of the EEA to be able to get that passport back.
>> That prospect, just adding to the volatility.>> The UK could try to copy Norway, it's a member of the European Economic Area, but not the EU. In order to do so though, Britain would need to implement EU regulations without having a say in writing them.