British bank shares fall as investors price in the likely negative impact on the sector of Prime Minister Theresa May's failure to win a majority in a snap election. Sonia Legg reports.
Britain's financial sector was already bracing for Brexit - and on Thursday there were reports Credit Suisse will axe 1,500 jobs in London. They're part of the Swiss bank's efforts to reduce costs globally. But they also reflect a change in approach towards Europe's biggest financial centre. (SOUNDBITE) (English) KEN ODELUGA, MARKET ANALYST, CITY INDEX, SAYING: "We know that the large banks - Credit Suisse is one of them, JP Morgan, Goldman and others come to mind - Barclays, even Lloyds have actually gone as far as to open registered entities within the European Union which they were not going to do before June 2016." Banks shares fell after the UK election resulted in a hung parliament - even though the FTSE rose in response to a weaker pound. The threat of more complicated Brexit talks and further strain on the economy were both factors. And further osmosis is now expected. (SOUNDBITE) (English) KEN ODELUGA, MARKET ANALYST, CITY INDEX, SAYING: "They've got specialists in one domicile and if they're needed in another, it clearly means that they're going to shift out of London and the impact of that is pretty clear. We're losing brain power, we're losing tax revenues. It's bad and I think it is actually going to happen more in the wake of this outcome." The favoured outcome for banks is a conservative-led coalition probably with Northern Ireland's pro-British Democratic Unionist Party. Its manifesto does at least talk of protecting trade and good customs. The worst outcome would be a Labour-led coalition. Its promising to hike corporate taxes from 19 to 26 percent by 2020 and restore a separate bank levy. The Royal Bank of Scotland would also face the threat of being broken up. Labour wants the split the state-owned lender into smaller regional banks.