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First On Fast: Big Bank Estimates Coming Down 10%

If you’re hoping for great bank earnings, don’t hold your breath. We’re hearing estimates are on their way down.

In breaking news, Financial Timesreporter Francesco Guerrera tells Fast Money that some of the biggest US banks are going to take a hit this quarter – and it’s going to hurt.

That’s because Guerrera says US banks will pay a cool $2 billion to the UK tax authorities and they’re taking the charge in their second quarter.

The tax – introduced last year amid public outcry at bankers’ pay – forced banks to pay a one-time 50% tax on all UK-based banker bonuses above £25,000, explains Guerrera.

And in an exclusive, Guerrera reveals how the numbers breakdown:

Bank Charge

Goldman $600 million
JPMorgan $500 million
Citi $400 million
BofA $400 million

Guerrera estimates the charges will reduce EPS at JPMorgan,Citi and BofAby a whopping 10%. You read that right -- reduce EPS by 10%.

Goldman and Morgan Stanley are also expected to see a fall in EPS although it's not clear by how much, explains Guerrera.

So, is any of this baked in the cake, as the traders like to say?

It doesn’t look like it.

Although the tax itself isn't a surprise; the fact that it's been quantified and about to hit the books has caught the Street completely off guard.

Sanford Bernstein analyst Brad Hintz tells us in the wake of this bombshell announcement estimates will be coming down -- as soon as tomorrow! “My estimates don’t include any of this,” says Hintz.

Does that mean all these stocks are a sell?

Not necessarily. Hintz tells us the best play in the space is still Goldman Sachs. “ I honestly think they’re undervalued,” he says.

*You can find our exclusive interview with Francesco Guerrera about 8 minutes into the Word on the Street clip.



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Trader disclosure: On June 16, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BAC), (NOK), (SBUX); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC); Adami owns (MSFT); Adami’s wife works at Merck; Terranova owns (IPSU), (BX), (PFE), (UDN), (GMCR), (RSX), (TER), (AXP), (BMO), (BBY), (DIS), (XCO), (SWN), (AAPL), (IPI), (SU), (V), (TEVA), (FXE), (FXB), (XOM), (COP), (OXY), (RDS.A); Terranova owns S&P Futures; Terranova owns UK Pounds; Terranova is short the US Dollar; Edwards owns (PM); Pete Najarian owns (AMD) calls; Pete Najarian owns (BAC); Pete Najarian owns (BBY) a call spread; Pete Najarian owns (C) calls; Pete Najarian owns (TCK); Pete Najarian owns (CNI); Pete Najarian owns (NOVL); Pete Najarian owns (MRVL); Pete Najarian owns (XLNX); Pete Najarian owns (MCD) a call spread; Pete Najarian owns (TEX) calls

For JoeTerranova
Terranova works for (VRTS)
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners owns more than 1% of (AMKR)
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Virtus Investment Partners owns more than 1% of (DBV)
Virtus Investment Partners owns more than 1% of (XLB)
Virtus Investment Partners owns more than 1% of (XLV)
Virtus Investment Partners owns more than 1% of (XLY)
Virtus Investment Partners owns more than 1% of (XLI)
Virtus Investment Partners owns more than 1% of (XLU)
Virtus Investment Partners owns more than 1% of (DRYS)

For Patty Edwards
Edwards owns (AAPL) for clients
Edwards owns (BAC) for clients
Edwards owns (BBY) for clients
Edwards owns (BJ) for clients
Edwards owns (BK) for clients
Edwards owns (C) for clients
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Edwards owns (DO) for clients
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Edwards owns (QQQQ) for clients
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For Brad Hintz
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Hintz owns (CME)

For Mike Khouw
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For Nishu Sood
Deutsche Bank owns 1% or more of KBH, TOL, HOV & RYL
Deutsche Bank provides Investment Banking services to KBH, TOL, PHM, LEN, HOV & RYL
Deutsche Bank has received non-investment banking compensation from PHM, LEN, MTH, RYL
Deutsche Bank provided non-investment banking securities-related services to PHM, HOV

For Anthony Scaramucci
SkyBridge Capital owns (RAI)




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