Shares in small banks have plunged since Britain voted to leave the EU last week. There are fears it could stop them lending to small businesses and have a knock-on effect for the rest of the UK economy. David Pollard reports.
Amid the UK's banking bloodbath, the smallest lenders are being hit hardest by the Brexit storm. Their shares, plunging this week, as investors worry about their future prospects. (SOUNDBITE) (English) LAWRENCE WHITE, REUTERS UK BANKING CORRESPONDENT SAYING: "If there's going to be a recession, what's their game plan for these smaller guys?" Shares in the so-called challenger banks - like Aldermore and Virgin Money - fell an average of 26.7 per cent on Monday. (SOUNDBITE) (English) LAWRENCE WHITE, REUTERS UK BANKING CORRESPONDENT SAYING: "People with retail deposits are protected up to 75-thousand pounds, so there's no immediate cause for concern that depositors need to come and withdraw their cash. The worry here is these banks may find it harder to lend and that small businesses may suffer. The banks are obviously worried, they're going out there and trying to reassure their customers, we're here for you and it's business as usual, but we have already heard from some banks they're going to tighten their lending criteria which makes it harder for small businesses to borrow, which has an impact on the economy." Big banks too are feeling the burn, facing heavy losses. Bad news for taxpayers, who own big chunks of RBS and Lloyds. RBS shares fell 16 percent on Monday. The drop since the vote has cost the Treasury some 8 billion pounds, close to the UK's net contribution to the EU last year.