FTSE 100 fallers: why are the RBS and Smith & Nephew share prices down this week?

The British lender saw PPI claims hit profits, sending its stock lower this week, while the shares in UK-based medical supplier Smith & Nephew took a tumble after its CEO said he will step down at the end of the month.

Over the last five trading sessions, the FTSE 100 has gained more than 2%, with the blue-chip index dragged higher by top performers like food delivery service Just Eat and Mexican-based mining company Fresnillo. However, it wasn’t a great week for all members of the Footsie.

PPI hits RBS shares hard

Royal Bank of Scotland (RBS) has had a difficult week after reporting a disappointing set of Q3 results that saw it record a £8 million operating loss in the quarter compared with the £961 million it made this time last year.

The hit its bottom line suffered in Q3 is largely the result of a £900 million charge the lender incurred relating to its mis-selling of Payment Protection Insurance (PPI).

Without PPI, and other exceptional costs, the bank would have reported an operating profit of around £1 billion, though that figure would still fall far below market expectations.

RBS, like many other UK banks, is struggling in a particularly challenging environment for British lenders, with the mortgage market remaining competitive and interest rates remaining low.

As such, RBS’ shares have fallen more than 6% this week, closing at 225p, down 15p from where it opened on Monday. However, considering the myriad of challenges the lender faces, it has performed relatively well, with its shares up 4% on a year-to-date basis.

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Smith & Nephew shares suffer after CEO steps down

Shares in the medical equipment company fell by 8% in early trading on Monday after its CEO Namal Nawana announced he will step down at the end of the month ‘to pursue other opportunities outside of the UK’.

Despite the company and Nawana claiming the split was amicable, according to reports, the CEO was apparently dissatisfied after the medical device group refused to meet his pay demands.

Nawana will be replaced by former Roche Diagnostics boss Roland Diggelman.

The recent hit to Smith & Nephew’s share price represents a small blip, however, with the company’s stock climbing more than 30% over the last 12 months.

The company's strong run is owed in large part to Nawana’s strategy following a 10-year period of below market growth.

You can go long or short RBS and Smith & Nephew with IG using derivatives like CFDs.


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