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| Version 9 | Version 10 |
|---|---|
| Bank bosses to meet governor King | Bank bosses to meet governor King |
| (about 1 hour later) | |
| The bosses of major UK banks will be meeting Bank of England Governor Mervyn King shortly. | |
| They are likely to tell Mr King that he needs to do more to reassure markets that the central bank will provide extra financial help if it is needed. | They are likely to tell Mr King that he needs to do more to reassure markets that the central bank will provide extra financial help if it is needed. |
| Ahead of the meeting, the Bank raised the funds available to lenders. | Ahead of the meeting, the Bank raised the funds available to lenders. |
| It is adding an extra £5bn to its normal weekly funds available to commercial banks, with £11bn now on offer at its weekly cash auction. | It is adding an extra £5bn to its normal weekly funds available to commercial banks, with £11bn now on offer at its weekly cash auction. |
| This week's additional funding, released on Thursday, was three times oversubscribed. | |
| Senior executives from the big five banks - HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS - are expected to meet Bank officials. | Senior executives from the big five banks - HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS - are expected to meet Bank officials. |
| 'Strong confidence' | 'Strong confidence' |
| The banks are said to want Mr King to guarantee that if any UK lender suffered a cash shortage, it would provide whatever finance was needed. | The banks are said to want Mr King to guarantee that if any UK lender suffered a cash shortage, it would provide whatever finance was needed. |
| 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 |
| Angela Knight, chief executive of the British Bankers Association, told the BBC's Today programme that she was confident the Bank would take action. | Angela Knight, chief executive of the British Bankers Association, told the BBC's Today programme that she was confident the Bank would take action. |
| "The Bank of England is very keen to ensure that we have good strong confidence in our market - after all we've got good strong banks," she said. | "The Bank of England is very keen to ensure that we have good strong confidence in our market - after all we've got good strong banks," she said. |
| "We're all facing as I say a particularly unusual situation in this credit crunch." | "We're all facing as I say a particularly unusual situation in this credit crunch." |
| 'No substance' | 'No substance' |
| The banks' meeting with Mr King comes a day after 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. | The banks' meeting with Mr King comes a day after 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. |
| 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 | 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 |
| 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. |
| "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." |
| 'Just criminals' | 'Just criminals' |
| 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 | 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". | 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 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." | "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." |
| The credit crunch started last summer following the revelation of multi-billion dollar bad debts in the US mortgage sector. | The credit crunch started last summer following the revelation of multi-billion dollar bad debts in the US mortgage sector. |
| The knock-on impact has made banks around the world unwilling to lend to each other, making credit much harder to find and more expensive. | The knock-on impact has made banks around the world unwilling to lend to each other, making credit much harder to find and more expensive. |