(MENAFN- ProactiveInvestors - N.America)
If European banks trading in the United States did not have enough problems to contend with back at HQ they certainly are nervous about the future in the big Apple too.
Most of the European banks came through their European Union stress tests with flying colours, except state-rescued Royal Bank of Scotland (NYSE:RBS) which was singled out for falling capital ratios.
However, at close of play on Monday, all the European banks on Wall Street were nursing losses on the day.
Barclays' ADRs (NYSE:BCS) were down 3% to close at $7.99, while UBS Group (NYSE:UBS) was down 1.2% at $13.49, RBS was down 3.1% at $4.94 and Deutsche Bank (NYSE:DB) ended down 2.75% at $13.07.
Although issues in Europe contributed to their malaise, events in New York didn't help either.
Jamie Dimon, the CEO of local banking heavyweight JPMorgan Chase (NYSE:JPM) tried to go on the public relations offensive for the banking sector, but it might have been a damp squibb.
Speaking to CNBC Dimon said that US Gross Domestic Product could scale 4% a year under the next US President. He stopped short of who that President might be, but he did amplify that if the next US President implements the appropriate reform programmes, GDP could rise to 4 percent and highlighted increasing wages and consumer spending as evidence.
He said he thought JPM makes the world a better place.
But banks, their customers, and most of all their investors, may need more persuading.
For one thing, central bankers who answer to parliament not shareholders have stapled ultra-low interest rates for years and this is hurting banks' bottom lines. Even if a spate of results last month from JPM, Citigroup (NYSE:C) and others was a huge relief for investors, this was in spite of low rates, rather than because of low rates.
While the Federal Reserve is shifting back towards a rate hike, there is still the possibility of an upset.
Dimon said that it was too early to say whether Brexit would be viewed as a negative. But that is another way of saying that it is too early to say whether or not the Fed can confidently raise rates and restore energy into the sleepwalking US banking sector.
Meanwhile, most bank shares are lower in 2016 as low rates persist.
But in one respect, he did highlight that although Brexit for Britain or the globe might or might not be a bad deal, it might escalate the break-up of the euro zone single currency bloc. Dimon said that could happen five years down the line.
That would further cause pressures as well as opportunities for European banks on Wall Street.
Whichever President the United States gets Hillary Clinton or Donald Trump Congress is making its mind up in favour of reintroducing legislation which some pundits reckon the absence of which resulted in the 2007 credit crunch.
Both Democrats and Republicans are contemplating the return of Glass-Steagall, the legislation that would break up banks' unified commercial and investment banking operations. Dimon sounded off on the recent shift in tone coming from Washington.
The legislation was repealed in 1999 but could make a return and so eat into the value of some banking stocks.
JPM shares ended down 0.3% at $63.80 on Monday.
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