Barclays

The most US-exposed of the UK Banks, Barclays could stand to be the greatest benefactor of President Trump’s next policy focus. A deregulation-happy administration that sets its sights on Obama era legislation – including the Volcker rule, a law unpopular with Wall Street that bans in-house proprietary trading – could result in a fresh wave of optimism in the States and even the re-establishment of those outlawed trading desks.

Closer to home, how the Bank of England responds to rising inflation, and ongoing Brexit talks – including a potential bespoke deal for the financial sector – will be key factors as to how the cross-border bank fares in 2018.

HSBC

The other internationally-exposed UK Bank, HSBC (HSBA), also looks set to benefit from the US tax reform which, although potentially leading to a one-off profit hit in Q4, could lower the global bank’s total tax bill.

But, as the largest UK bank, HSBC will also be closely watching Brexit negotiations. Headquartered in London, the bank currently has unfettered access to UK and European markets. If, however, no deal to allow UK financial services to access the European mainland is reached, it could force the bank to move. Tack on a heavy reliance on Asian markets such as Hong Kong, and HSBC will be the institution most influenced by global events in 2018.

Lloyds

The bailed-out banks turned retail investor darling, Lloyds (LLOY) remains a key barometer of the UK economy as the holder of its largest mortgage book. Under Chancellor Hammond’s leadership, the Treasury has sold the entirety of its 43% post-bailout position. Now, the bank looks to return to its heady pre-2008 300p highs.

How can it achieve that? Further hawkishness from the bank of England would be needed in 2017, having raised interest for the first time in a decade in 2017. Whilst policymakers have forecast a further two rate hikes over the coming three years, any indication that high inflation will persist may force them to act sooner, rather than later.

Royal Bank of Scotland

As the only major UK Bank to be bailed out by the taxpayer that remains in the Government’s hands, the Royal Bank of Scotland (RBS) has been forced to all but retreat from its operations that once spanned the globe. That, however, could be seen as a bonus for those traders looking for isolation from the US – in particular the man leading administration and his propensity to act on a whim. Might 2018 be the year to stay away from the US?

The bank has done a lot to clean up its act, settling several legacy court cases. With that said, the big one is still outstanding; despite settling fraud claims with the US Department of Justice, RBS is still faces a multi-billion dollar fine for selling mortgage backed securities before the 2008 crisis. Will a figure finally be reached this year?

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