The share price of UK banks rose in the immediate aftermath of the publication of the UK government's white paper on Brexit.
The document, which sets out the UK government’s proposals for the future relationship of the UK with the European Union (EU), stated the UK will not seek mutual recognition of financial services but instead become a "third country", with a looser arrangement between the economic bloc and the UK.
The UK would have “equivalent” rules on financial services to those of the EU, the paper stated.
UK banks listed on the London Stock Exchange are up an aggregate 1.25 per cent since the publication of the paper, with the broader UK finance sector up 1.1 per cent.
HSBC and Barclays are up about 1.5 per cent, while Lloyds and RBS are up 1 per cent.
Kathleen Brooks, research director at Capital Index, said: "The resilience of the UK's biggest banks is unsurprising since they can well afford to set up multiple offices across Europe, however, the relative disadvantage for the UK’s smallest banks is one reason why Standard Chartered, a smaller investment bank, is a relative under-performer.
"It is worth noting, that Standard Chartered may also be suffering because of its links to emerging markets that are currently at risk from US President Trump’s trade wars.”
She added the market may take the view that the UK can attract financial services businesses away from the EU as a result of not having the same regulatory environment.
Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), has previously stated that he does not expect a “bonfire of regulations” to happen as a result of the UK leaving the EU. He also said UK banks could cope in the event of the UK exiting the EU without a deal.
His colleague at the regulator, Christopher Woolard, executive director for competition and strategy at the regulator, said the EU's attitude has not been helpful for the financial services industry.