Bank stocks are getting clobbered

Screen Shot 2016 06 24 at 7.27.36 AMEuropean bank stocks plunged

US bank stocks are getting clobbered after Britain’s vote to leave the European Union threw global markets into turmoil and after Europe’s banks plunged.

Citigroup and Bank of America are down nearly 8% in pre-market trading; Goldman Sachs is off about 7% and JPMorgan Chase and Wells Fargo are both down more than 6%.

The Euro Stoxx Banks index is off more than 16% in the wake of the vote, with Europe’s biggest lenders logging their biggest decline on record, according to Bloomberg News.

S&P 500 Futures are down 3.8% as of 7:20 a.m. in New York, and European and Asian benchmarks are all sharply lower. The Euro Stoxx is down 8.4% to its lowest level since February while the pound dropped more than 11% at one point to a30-year low against the dollar.

For the US banks, the Brexit vote creates two problems. Uncertainty around the impact of the decision, as the UK begins a complicated process of removing itself from the EU could hit their trading businesses. This volatility could also have broader economic implications.

“Even for countries with a relatively low trade exposure, heightened volatility and uncertainty are likely to lead to weaker growth through delayed investment and consumer spending and weaker employment,” HSBC economists wrote in a note Friday.

At the same time London is a key financial center, and an overseas hub for the big Wall Street firms.

JPMorgan’s Chief Executive Jamie Dimon wrote in a memo to staff that the bank has 16,000 employees in London and that the bank might have to make changes to its “European legal entity structure and the location of some roles.”

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