(Bloomberg) -- Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc jumped amid optimism that a U.K. deal to leave the European Union would support domestic lenders.
RBS jumped as much as 11.6% on Friday, the biggest intraday rise since July 2014, while Lloyds rose as much as 10%, its largest increase since February 2016.
The surge came after European Council President Donald Tusk said he’d received “promising signals” that a Brexit deal is possible, following talks between U.K. Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar. The pound rose as much as 0.8%.
Lloyds, the biggest British mortgage lender, and RBS both trade at a “huge Brexit discount,” investor David Herro said in an interview on Bloomberg TV. He is chief investment officer at Harris Associates, which owns 2.86% of Lloyds shares and 2.05% of RBS.
Both banks’ shares trade below the levels seen before the EU referendum that set the course for Brexit in June 2016. Herro voiced frustration at the slow process. “These people have been negotiating this over three years or so. I often wonder what they talk about when they are in the conference room,” he said. “What do they continue to rehash week after week, month after month, year after year?”
To contact the reporter on this story: Stefania Spezzati in London at sspezzati@bloomberg.net
To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers
©2019 Bloomberg L.P.
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