Stocks of U.S. banks plunge after Britain voted to leave the European Union. Fred Katayama reports.
Stocks of U.S. banks got hammered after Britain voted to leave the European Union. U.S. Bank's Eric Weigand explains why. (SOUNDBITE) ERIC WIEGAND, SENIOR PORTFOLIO MANAGER, U.S. BANK (ENGLISH) SAYING: "Certainly those that have more multinational exposure, will feel a little bit more burn as a result of this outcome. Not only will they feel the pressure of uncertainty surrounding their business model, physical location, staffing requirements, the ease of benefit of emigration. Also, the uncertainty around potential economy slowing throughout the Euro Zone, increased regulatory environment, still, deleveraging of their balance sheets will continue to create pressure there." A British exit will hit JPMorgan Chase and Goldman Sachs the hardest among American banks, according to analysts at Keefe, Bruyette & Woods, with Goldman earning nearly a fifth of its operating profit in Britain. They say costs will rise and capital markets activity will decline at the biggest banks, including Bank of America and Citigroup. State Street's Michael Arone: (SOUNDBITE) MICHAEL ARONE, CHIEF INVESTMENT STRATEGIST, STATE STREET GLOBAL ADVISORS (ENGLISH) SAYING: "There are fears that you'll see financial institutions leave, the U.K. jobs might leave the U.K., and kind of migrate to different parts of Europe." Arone says investors are betting that Brexit may force the Fed to pull back its plans to hike interest rates this year. That, combined with increasing regulation, could mean less income for banks.