Since the beginning of this year, over a quarter of the world’s biggest banks have lost market value. According to FactSet data, that amount is about $465 billion in total.
Although bank shares have been on a decline since the Brexit vote, the big banks have been losing in market value since January due to several factors such as oil prices, U.S. interest rates and the Chinese economy.
The big picture
The biggest worries with a sharp share-price decrease, according to MarketWatch, are the following:
- It may be more expensive for banks to raise their capital;
- Quick share-price falls may foster inaction among bank executives who may wait for share prices to recover as opposed to selling equity;
- Bank employees may become restless and impatient where stock options in compensation packages may become less attractive.
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