• U.K. has lost $10.3 billion in value of RBS, Lloyds holdings
  • Banks have dropped more than 29% in two days of London trading

One of the main Brexit pledges was more funding for domestic policies. But the most immediate fiscal impact of the vote has been slashing the value of bank stakes the British government was relying on for more than 25 billion pounds ($33 billion) of income.

So far the U.K. has lost about 7.8 billion pounds in the value of its stakes in Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc since the country voted to leave the European Union, according to data compiled by Bloomberg.

Advocates for a so-called Brexit argued the country would have more money for domestic programs, like the National Health Service, because free from the EU, it would stop sending checks to Brussels. Yet in the past two days, RBS has dropped 30 percent, while Lloyds is down 29 percent, eroding the value of taxpayers’ stakes. S&P Global Ratings cut the U.K.’s top credit grade by two levels on Monday, citing “risks of a marked deterioration of external financing conditions.”

Since 2010, the government has recovered about 75 billion pounds from selling holdings in bailed out banks and disposing of the loan books of collapsed lenders. It planned to raise about 25 billion pounds from selling RBS shares through March 2020, in which it has a 73 percent stake and to fully return Lloyds to private ownership by next March. It currently owns 9.2 percent of Lloyds.

Analysts downgraded British banks en masse on Monday, cutting their earnings outlooks as investors seek to comprehend the fallout from Brexit. Even before the vote to leave the EU, the nation’s lenders faced an uphill struggle to grow profitability. The prospect of a recession and an interest rate cut from the Bank of England will make that task harder still.

With the shares worth considerably less than the government’s break even price of 407 pence for RBS and 73.6 pence for Lloyds, at 173.4 pence and 51.15 pence respectively at the close of trading on Monday, a sale any time soon is highly unlikely, according to Ian Gordon, an analyst at Investec in London.

While the U.K. government is sitting on a major paper loss, the stock market collapse has also taken a chunk out of the personal wealth of the nation’s bank chiefs and some of their biggest backers.

Billionaire Virgin Money Holdings UK Plc owner Richard Branson has seen the value of his stake in the lender collapse by about 250 million pounds, while Christopher Flowers has a paper loss of about 211 million pounds on his firm’s investment in OneSavings Bank Plc.

Barclays Plc Chief Executive Officer Jes Staley has seen his shares in the bank slump by about 2.4 million pounds in the past two trading days, while Vernon Hill, the chairman and founder of Metro Bank Plc, has seen the value of his 5.9 percent stake in the London-based consumer bank fall by about 22 million pounds, according to data compiled by Bloomberg.

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