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| Bank bosses to meet governor King | |
| (30 minutes later) | |
| The bosses of major UK banks will be meeting Bank of England governor Mervyn King later. | The bosses of major UK banks will be meeting Bank of England governor Mervyn King later. |
| They are likely to tell Mr King that he needs to do more to reassure their creditors that the central bank will provide help if it is needed. | They are likely to tell Mr King that he needs to do more to reassure their creditors that the central bank will provide help if it is needed. |
| It comes a day after the Financial Services Authority launched an inquiry into whether false rumours were spread in the City to undermine bank shares. | It comes a day after the Financial Services Authority launched an inquiry into whether false rumours were spread in the City to undermine bank shares. |
| The Bank of England reassured investors that the rumours were untrue. | The Bank of England reassured investors that the rumours were untrue. |
| There has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling UK Financial Services Authority Read Robert Peston's blog | There has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling UK Financial Services Authority Read Robert Peston's blog |
| The UK's financial watchdog, the Financial Services Authority (FSA), said it would "not tolerate" traders starting "false" rumours about firms to make cash from dealing in their shares. | |
| HBOS, whose shares fell as much as 17% at one stage on Wednesday, denied rumours of funding difficulties. | HBOS, whose shares fell as much as 17% at one stage on Wednesday, denied rumours of funding difficulties. |
| "There has been a series of rumours in the market today [Wednesday]," said a HBOS spokesman. | "There has been a series of rumours in the market today [Wednesday]," said a HBOS spokesman. |
| WHAT IS SHORT-SELLING? Trader borrows shares, then sells themRepurchases shares later at a lower priceTrader returns shares to lenderMakes a profit on the difference | |
| "A number of ill-founded and malicious rumours about the UK banking system in the markets. | "A number of ill-founded and malicious rumours about the UK banking system in the markets. |
| "These rumours have not a shred of substance whatsoever. They are lies." | "These rumours have not a shred of substance whatsoever. They are lies." |
| 'Unfounded rumours' | 'Unfounded rumours' |
| HBOS said it supported the "decisive action" of the FSA to investigate the alleged market abuse. | HBOS said it supported the "decisive action" of the FSA to investigate the alleged market abuse. |
| Those behind the rumours are no worse than ordinary criminals, they're just basically stealing money from the market Banking analyst Ralph Silva | |
| "There has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling," the FSA said in a statement. | "There has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling," the FSA said in a statement. |
| In short-selling a trader borrows shares, sells them immediately and hopes to repurchase the shares in the future at a lower price. | In short-selling a trader borrows shares, sells them immediately and hopes to repurchase the shares in the future at a lower price. |
| The trader can then return them to the lender and make a profit on the difference. | The trader can then return them to the lender and make a profit on the difference. |
| Ralph Silva, a banking analyst at financial consultancy and research firm, Tower Group, told BBC Radio Five Live that those behind the false rumours "ought to be flogged". | |
| "They're no worse than ordinary criminals, they're just basically stealing money from the market," he said. | |
| "They're putting out rumours, they're putting out lies, and they're taking advantage of the lies they put out, they're just criminals." |