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. We plan to lower the fair value estimates for several U.K. banks such as

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.

We also now see the strong possibility of Scotland seeking independence, causing further turmoil to the overall system, particularly the Edinburgh-based banks Lloyds and Royal Bank of Scotland, which may need to re-domicile.

While the impact of Brexit is far reaching, we do see an undervalued opportunity with

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