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Lenders told to bolster balance sheets as Bank of England warns over Brexit

Published 29/03/2016

The FTSE 100 index opened up 29.3 points to 6134.6
The FTSE 100 index opened up 29.3 points to 6134.6

Financial stocks weighed heavy on the London market after the Bank of England told lenders to shore up their balance sheets ahead of the EU referendum.

The FTSE 100 Index was down 0.58 points to 6105.9, as t he UK central bank warned of the risks posed to the financial sector amid the increased uncertainty ahead of the vote.

The comments came as the Bank's Financial Policy Committee ordered lenders to bolster their capital buffers after seeing banking profits come under pressure from stubbornly low interest rates across the globe.

Further drops in oil and metal prices also took their toll on top flight stocks, with the FTSE 100-listed miners dominating the biggest fallers.

Anglo American and Glencore fell 21.7p to 479.1p and 7.4p to 143.8p respectively, as Brent crude plummeted 1.4 dollars to 38.9 US dollars a barrel.

In Europe, Germany's Dax climbed 0.4%, while the Cac 40 in France was up 0.9%.

Sterling was up slightly against the dollar at 1.42, as policymakers at the US Federal Reserve hinted they could hike interest rates next month and investors waited for further clues from a speech by Fed chair Janet Yellen.

Sterling was also ahead slightly ahead against the euro, at 1.27.

Among stocks, HSBC fell back 5.8p to 432.5p, the Royal Bank of Scotland slipped 2.9p to 220.7p, while Standard Chartered dropped 1.1p to 439.5p.

But budget airline easyJet rose 24p to 1525p as its shares bounced back from last week's heavy falls following the Brussels terror attacks.

The carrier was a strong blue chip riser thanks to a broker upgrade.

Housebuilders were among the biggest risers, as the Bank of England restricted its intervention in the housing market to a crackdown on buy-to-let lending.

The Prudential Regulation Authority (PRA) - the arm of the Bank that regulates banks and the financial sector - said it wants lenders to make income checks more stringent for buy-to-let investors and test whether they can still afford their regular repayments at higher interest rates.

Berkeley Group was up 75p to 3267p, while Taylor Wimpey rose 3.8p to 190.6p.

Irn Bru maker AG Barr was in sharp focus as it said it would move away from sugary drinks in light of the surprise levy on high-sugar beverages proposed by the Chancellor.

The Cumbernauld-based firm said it expects "at least two thirds of our portfolio will be lower or no sugar" by the time the levy on sugary drinks is introduced in April 2018. Currently 40% of the group's portfolio has a low sugar content.

The drinks sector was sent reeling by the announcement of the new tax in the Budget earlier this month, which aims to raise around £520 million a year to help fund sports for schools.

The FTSE 250 firm, which also makes Tizer and Snapple, said its annual pre-tax profits lifted by 7% to £41.3 million, in a "difficult market" in the UK.

Shares were down 1.5p to 520.5p.

The biggest risers in the FTSE 100 Index were Mediclinic International up 29p to 883.5p, Associated British Foods up 104p to 3369p, Ashtead Group up 25.5p to 850.5p, Marks and Spencer Group up 12p to 404.5p

The biggest fallers in the FTSE 100 Index were Glencore down 7.4p to 143.8p, Anglo American down 21.7p to 479.1p, Rio Tinto down 74.5p to 1863p, and BHP Billiton down 28.4p to 750p.

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