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Market cap of Europe’s five largest banks has slumped by 42 per cent since January

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The coronavirus outbreak has hit the European banking system hard, with many of the largest banks coping much worse with the crisis than their US peers. While the US financial giants utilised the frenzied trading around the Covid-19 turmoil to boost their investment banking and trading revenues and to better position themselves in times of economic uncertainty, major European lending facilities all reported massive financial losses in the second quarter, causing their market cap to plunge below March levels.

According to data presented by StockApps.com, the market capitalisation of Europe’s five largest banks dropped to USD233.1 billion in August, a 42 per cent plunge since the beginning of the year.

Last month, Europe’s largest bank by assets, HSBC, reported a 65 per cent fall in pre-tax profits for the first half of 2020 to USD4.3 billion, down from USD12.41 billion reported a year ago. The revenue dropped by 9 per cent to USD26.7 billion during the same period.

In December 2019, the market capitalisation of the London-headquartered financial giant stood at USD161.5 billion, revealed Statista and YCharts data. During the next three months, this figure dropped to USD114 billion in March. The noticeable decreasing trend continued in the following months, with the market capitalisation falling to USD88.1 billion in August, a 45 per cent plunge since the beginning of the year.

PNB Paribas, the second-largest bank in Europe, lost USD19.7 billion in market cap amid the coronavirus crisis, a 26 per cent plunge in eight months. In January, the combined value of shares of the French financial giant stood at USD74 billion. Statistics show this figure stumbled to USD54.3 billion last month.

Since the beginning of the year, Europe’s third-largest bank by assets, Banco Santander SA, lost 49 per cent of its market cap. Statistics show the Spanish bank had USD66.97 billion in market capitalisation in December 2019. By the end of August, this figure dropped to USD33.7 billion.

However, the YCharts data revealed that Lloyds Banking Group witnessed the most significant drop in the market capitalisation this year, with the figure falling from almost USD58 billion in December to USD25.1 billion in August, a 56 per cent plunge in eight months. After putting aside GBP2.4 billion for bad debts, Britain’s biggest high street lender reported a loss of GBP676 million in the second quarter of 2020, down from a GBP1.3 billion profit during the same period last year.

The Lloyds Bank chief executive officer, António Horta-Osório, says: “The outlook has clearly become more challenging since our first-quarter results, with the economic impact of lockdown considerably larger than expected at that time.”

Statistics show the market cap of ING Group, as the fifth-largest bank in Europe, dropped by 32 per cent since the beginning of the year, with the combined value of bank`s shares falling from nearly USD47 billion in January to USD31.8 billion in August.

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