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Commentary

We Plan to Lower Our Fair Value Estimates for Several U.K. Banks

The Brexit vote will have wide-reaching implications for our European financials coverage universe.

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The Brexit vote will have wide-reaching implications for our European financials coverage universe. We plan to lower the fair value estimates for several U.K. banks such as  Barclays PLC (BCS),  Royal Bank of Scotland Group PLC (RBS), and  Lloyds Banking Group PLC (LYG), and we will review others such as  Banco Santander SA (SAN), which has U.K. exposure.

We believe this raises the strong possibility that we may change our moat trend ratings for Lloyds, Royal Bank of Scotland, and Barclays to negative from stable. We do expect the U.K. system and the broader European Union to experience substantial uncertainty and volatility going forward, as the U.K. seeks to renegotiate trade agreements with other countries, unwind other legal agreements with the EU over the next several years, and deal with the political aftermath of Prime Minister David Cameron's resignation.

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Stephen Ellis does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.