A fund manager who correctly predicted the 2008 financial crash says he is shorting three UK banks – betting their share price will fall – in the belief that Britain will crash out of the EU next March, and that Labour leader Jeremy Corbyn will become prime minister.
Steve Eisman, the inspiration for the character played by Steve Carell in the movie version of Michael Lewis's book The Big Short, said he expected UK markets to fall as a result of Brexit.
In an interview with the BBC, Mr Eisman said he had bet against two prominent UK banks “about a month and a half ago” due to the possibility of Britain leaving the EU and Mr Corbyn becoming prime minister.
“I think in either eventuality the British market will go down,” he said. Mr Eisman said he recently added a third bank to his shorting bet as it appears UK leader Theresa May’s Brexit proposals will fail.
Mr Eisman, a fund manager for Neuberger Berman Group, declined to indicate which banks he had selected, but said "it doesn't matter which UK banks I'm short. I could have picked three others", suggesting it was an industry-wide issue for the UK.
Bloomberg suggests that the most-shorted banks listed in the UK are currently Metro Bank and CYBG.
Mr Eisman also said he believed that the current dynamic made the possibility of Mr Corbyn becoming prime minister more likely.
He has previsouly labelled the Labour leader a Trotskyite, suggesting "you don't want to be invested in the UK if a Trotskyite is prime minister".
Asked if, like other investors, he saw another global financial crash on the horizon, Mr Eisman said he didn’t.
"The financial system in the United States is safe for the first time in the 30 years I've analysed it," he said.
On US president Donald Trump's trade war with China, Mr Eisman said the policy was "correct". "You're not going to get China to change by asking," he said.
In the lead up to the 2008, Mr Eisman worked for a hedge fund called FrontPoint Partners, and bet against collateralised debt obligations (CDOs). When the crisis hit, his positions reportedly led the company’s assets to double in value to $1.5 billion.
