The Lloyds share price (LON:LLOY) fell to fresh 2-year lows on Monday as the UK government was plunged into chaos as reports broke Theresa May was going to pull the meaningful vote scheduled for Tuesday.
The drop in the Lloyds’ share price was accompanied by a decline in the FTSE 100 and peers in the banking sector.
Lloyds shares fell as low as 52.96p on Monday morning, a level not touched since October 2016.
Ongoing uncertainty surrounding the UK exit of the EU is raising fears over the long-term health of the UK economy on which Lloyds is almost exclusively reliant on.
Theresa May failure
Theresa May failed to win enough support for her Brexit deal with the numbers stacked against her in the meaningful vote in parliament.
The UK Prime Minister has been under pressure from sections of her own party who have vocally condemned a deal that only scrapped through her cabinet with the resignation of two ministers.
The concern for investors in Lloyds and the rest of the banking sector is the possibility of the UK leaving the EU with no deal and the potential negative impact on the UK economy.
The Bank of England has made dramatic predictions for the UK economy in the case of a no deal including a 30% drop in house prices and sharp declines in overall GDP. Both of these scenarios would ravage the profitability of Lloyds who is reliant on lending to businesses and individuals in the UK.
Strategic Partnership
The ongoing uncertainty created by Brexit hasn’t held Lloyds back from forging strategic partnerships in the form of a wealth management tie up with Schroders to harness Lloyds existing channels and customer base to provide fresh revenue streams.
António Horta-Osório, Group CEO of Lloyds, commented:
“I am delighted to be announcing this exciting partnership with Schroders and the creation of a new market leading wealth management proposition. This provides a strong platform for growth and is a further step in the delivery of our strategic objectives.”
The move highlights Lloyds forward thinking strategy so while Brexit may cause short term volatility for investors in Lloyds shares, the future past Brexit promises increased revenue channels.