LONDON (Reuters) - The chief executives of Lloyds Banking Group (LLOY.L) and Royal Bank of Scotland (RBS.L) moved to reassure thousands of workers that their state-backed companies would weather the turmoil sparked by Britain’s decision to quit the European Union.
In separate memos sent to staff on Tuesday, Lloyds CEO Antonio Horta Osorio and RBS CEO Ross McEwan thanked staff for executing contingency plans effectively in the wake of Friday’s historic result and for keeping focus on customers while sterling, stock and bond markets plummeted.
But RBS boss McEwan warned staff that Britain’s decision to leave the EU has caused a range of economic uncertainties “in the short, medium and long term”. RBS said on Friday it had no current plans to change where or how it operated following the vote..
The lenders — both part-owned by the UK government since taxpayer bailouts in 2008 - saw their stock prices plunge in the two trading days following Friday’s result, as investors rattled by talk of a deep recession and a string of earnings downgrades dumped bank stocks in droves.
“We did what we do best on Friday,” Horta Osorio said in the memo.
“We had robust plans in place for either outcome, and I have been immensely proud of everyone who ensured that they were delivered smoothly,” he said.
Horta Osorio, who is Portuguese and has led the bank since 2011, said the bank’s low-risk lending approach and historic brands had put Britain’s biggest mortgage lender in a position of strength “to weather turbulence in our sector and the wider market”.
McEwan, a New Zealander, noted that the result had rippled beyond markets and into “everyday exchanges between colleagues, friends and family” but called on RBS employees to remember how diversity was a major contributor to the bank’s success.
“As someone born outside the UK, I see one of this country’s biggest strengths as its openness to the rest of the world, and the people of it. As a major employer and backer of the economy we have a duty to ensure that we reflect that,” he said.
While both executives claimed the fundamental strengths of their banks were unaffected by the vote, prospects of swift return to full private ownership have taken a significant knock.
Sources close to Britain’s government say it has shelved plans to sell stakes in both banks for the rest of the year because market volatility has made it too difficult to judge whether disposals represent fair value for taxpayers.
The Treasury had planned to further reduce its exposure to the banks it took over during the financial crisis, by raising 9 billion pounds via sales of stock to fund managers and a discounted offer to the public.
“It is going to take quite a while for us to understand the implications for the banks before we could even consider starting to sell,” one of the sources said.
Lloyds shares, which have fallen more than 25 percent since the beginning of the year, rebounded 6.7 percent to trade at 54.7 pence at 1400 GMT, almost 20 pence off the government’s so-called break-even price.
RBS shares, which have fallen by more than 27 percent in the three days since the Brexit decision, gained 3 percent by 1400 GMT.
Editing by Keith Weir