There are many companies that could benefit if the Bank of England meets expectations at noon in London - 7 a.m. Eastern time - and cuts interest rates for the first time in more than seven years. But London's banks won't be among those.
The central bank is widely expected to opt for a quarter-point cut to 0.25% in response to a slowdown triggered by the U.K's vote to leave the EU and what many predict, is a recession in the making.
But shares of the larger U.K banks were up during early London trading. HSBC(HSBC) - Get Report was leading the board with a gain of 1.6%, to 500 pence ($6.50), followed by Barclays(BCS) - Get Report , Royal Bank of Scotland(RBS) - Get Report and Lloyds(LLY) - Get Report .
With net-interest margins at or close to historic lows and investment banking businesses out of favour, earnings growth at U.K. banks has tended to be driven by expanded loan books, write-backs from falling loan impairments and stable-moderately lower litigation costs.
It seems that the best the sector can hope for in Thursday's announcement is to be able to somehow neutralise any effect on profitability from the Bank of England decision, although how this will be achieved remains to be seen.
Barclays CEO Jes Staley said on July 25 that zero and negative interest rates are ineffective in addressing weakness in the economy, but highly destructive for the financial systems which are subject to them.
Staley also advocated against jumping to too quick a judgement on the likely effects of the referendum on the long- term health of the British economy.
If the MPC does cut rates on Thursday then the move will leave the bank rate just 25 basis points above zero and, with year-on-year inflation running at 0.5%, it will force the U.K's real interest rate into negative territory for the first time in history.
In a sign of what might be to come if the BoE does drive rates lower, the Royal Bank of Scotland is reported to have written to business customers at the end of July notifying them of a change to its terms and conditions. The changes will now allow the bank to charge negative interest rates on business deposits.
In a low or negative interest-rate environment, domestic banks without overseas assets will be the most exposed to margin and profitability pressures, although the problem will be magnified for challenger banks whose smaller scale makes it harder for them to grow when profit is under pressure.
Share of challenger banks were all lower in early trading, with OneSavings Bank (OSVBF) leading the decline and trading down 1.9% at 203.0 pence. Virgin Money (VRGDF) , Metro Bank (MBNKF) and Shawbrook were all down by around 0.5%.