03.11.2007 Britain's top three banks have lost almost £14billion of their market value in two days as fears grow of a looming crisis in the sector.
Worst affected is Barclays, down 11 per cent amid market rumours - later denied - that it had approached the Bank of England for an emergency loan.
Shares in Royal Bank of Scotland lost 8 per cent over the two days, falling to 475.5p, while HSBC, Britain's biggest financial firm, lost 4.7 per cent to 906p. The FTSE 100 Index fell 55.5 points to 6530.6 - down 2 per cent in a week that has seen a return of the climate of fear sparked by September's run on Northern Rock.
Markets worldwide are feeling the aftershocks from a recession in America's property market that has led to billions in losses at some of Wall Street's largest banks.
Brokerage Merrill Lynch, whose logo is a thundering bull, this week ousted its chief executive Stan O'Neal after losses of more than £4billion on investments linked to socalled sub-prime mortgages.
These are loans made to poor families who have little chance of paying them back.
Analysts fear Merrill could be forced into another £5billion of writedowns related to its heavy bets on the mortgages.
Banking giants including Citigroup and Switzerland's UBS have also been hit by concerns over their sub-prime involvement. Executives from Citigroup are said to be holding an emergency meeting this weekend amid fears of escalating bad debts.
Analysts fear Britain's top players could face similar problems.
If the credit crunch intensifies, profits at Barclays and Royal Bank of Scotland will face more pressure.
Source :http://www.thisislondon.co.uk |
