Bank Shares Plunge up to 40% in an Hour After News of £50bn Banks Deal Was Leaked to the BBC
MAIL Online: Banks 'ask Darling for £50billion cash injection' / Royal Bank of Scotland shares plunge a massive 40% / FTSE rally wiped out as it tumbles back into the red / British savers frozen out by Icelandic internet bank / EU summit to discuss £80,000 savings guarantee

British banking shares plunged today after it was claimed finance chiefs had asked the Chancellor for a £50billion bail-out to stave off further turmoil.

The report by BBC business editor Robert Peston unleashed a fresh day of chaos on the Stock Market, with shares in Royal Bank of Scotland tumbling by 40 per cent at one stage in early trading.

Its value plummeted by a massive £10billion on top of the 20 per cent fall yesterday despite the bank's denial that it had asked the Government for capital at a secret meeting last night.

Lloyds TSB also saw its value drop up to 26 per cent. HBOS fell by 23 per cent and Barclays by 17 per cent as investors panicked at the prospect of household names being part-nationalised and launched a mass sell-off.

After its biggest ever one-day drop in history, the Stock Exchange initially rallied by almost three per cent on the back of a late surge on Wall Street and a huge rates cut in Australia but the turmoil around the banking sector soon dragged it back into the red.

Throughout the morning, it swung between positive and negative territory in an echo of the mixed fortunes of markets in Asia and Australia overnight. Bank Shares Plunge up to 40% in an Hour After News of £50bn Banks Deal Was Leaked to the BBC >>> By Nicola Boden | October 7, 2008

THE TELEGRAPH:
Financial Crisis: Alistair Darling Under Fire over Banking Meltdown: Alistair Darling, the Chancellor, is under fire after the banking crisis intensified as billions were wiped off the value of Britain's high-street banks in minutes. >>> By Robert Winnett, Deputy Political Editor | October 7, 2008

THE TELEGRAPH:
Financial Crisis: Who Is Advising Alistair Darling?: The team helping Alistair Darling to prepare Britain's response to the ongoing financial turmoil.

Geoffrey Spence is one of the central figures in the small team around Mr Darling drawing up plans to help struggling banks.
Mr Spence, was a former senior investment banker at HSBC, Deutsche Bank and Allco Finance Group who joined the Treasury's Council of Economic Advisers in April. He previously helped mastermind the Government's controversial private finance initiative. >>> By Robert Winnett, Deputy Political Editor | October 7, 2008

Watch FT video: RBS Shares Plunge >>> | October 7, 2008
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Banks in Meltdown as Billions Wiped Off Values
THE TELEGRAPH: The banking industry has plunged into unprecedented turmoil as share prices plummeted, knocking billions off the value of some of the High Street's top banks within minutes.

Shares in RBS, the owner of mortgage lender Natwest, plunged more than 39 per cent in early trading - wiping more than £10billion off the value. It had already suffered a fall of 20 per cent on Monday.

Shares in HBOS dropped by as much as 13 per cent, Barclays fell by up to 15 per cent and Lloyds TSB by 21 per cent.

The declines came as British banks told the Government they support its plan to take substantial shareholdings in return for an injection of billions of pounds.

The chief executives of RBS, Barclays, Lloyds TSB and HBOS met the chancellor, Alistair Darling, on Monday night and other senior members of the Tripartite Authorities.

The banks are understood to have told Mr Darling that they broadly back a plan for the Government to take equity stakes in return for capital injections.

RBS declined to comment on its share price movement or the reports of a plea for a Government capital boost.

However, the bank confirmed that Sir Fred Goodwin, the chief executive, was part of the team of banking bosses involved in last night’s meeting with the Chancellor.

A Barclays spokesman said it had “categorically not” requested any capital from the Government.

Analysts have predicted the Government might need to pump between £30bn and £50bn into the banks. Banks in Crisis as Billions Wiped Off Share Prices >>> By Katherine Griffiths and James Quinn | October 7, 2008

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