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Banks' share prices fall sharply Banks' share prices fall sharply
(31 minutes later)
Banking shares have fallen in London amid news that the bosses of big banks had met Chancellor Alistair Darling to discuss fundraising.Banking shares have fallen in London amid news that the bosses of big banks had met Chancellor Alistair Darling to discuss fundraising.
The falls were led by Royal Bank of Scotland, which fell 38%, followed by Lloyds TSB, which declined 20%, and Barclays, which was down 12%. Royal Bank of Scotland fell 32%, Barclays and Lloyds TSB were both down 9% and HBOS fell by 14%.
The banks called on Mr Darling to come up with rescue plan proposals, BBC business editor Robert Peston said.The banks called on Mr Darling to come up with rescue plan proposals, BBC business editor Robert Peston said.
Barclays has denied it has requested any capital from the government. Barclays has categorically denied that it has requested any capital from the UK government.
Banking sources have said there will be another meeting later on Tuesday.Banking sources have said there will be another meeting later on Tuesday.
The Treasury said it did not comment on whether or not meetings were taking place.The Treasury said it did not comment on whether or not meetings were taking place.
Rescue plan
Monday's meeting was attended by Mr Darling together with Mervyn King, governor of the Bank of England, and Adair Turner, chairman of the Financial Services Authority.Monday's meeting was attended by Mr Darling together with Mervyn King, governor of the Bank of England, and Adair Turner, chairman of the Financial Services Authority.
What the Irish government did, in guaranteeing both retail and wholesale deposits in their banks, may turn out to be something of a model for Europe-wide action Robert Peston, Business editor, BBC News Read Robert Peston's blog
Representing banks were the chief executives of RBS, Barclays and Lloyds TSB.Representing banks were the chief executives of RBS, Barclays and Lloyds TSB.
The Treasury is understood to have been formulating a plan that would allow the government to provide extra funding to the banks in exchange for stakes in them.The Treasury is understood to have been formulating a plan that would allow the government to provide extra funding to the banks in exchange for stakes in them.
The government said it would not speculate about what policy options are being considered, but repeated Mr Darling's assurances from Monday.
"As the chancellor said yesterday, we will do whatever it takes to maintain stability and support a well-functioning banking system," a Treasury spokesman said.
Lending problems
Also depressing shares in RBS, which owns NatWest bank, has been the news from Monday that the ratings agency S&P has downgraded it, which means that the raters think it is a less safe institution to lend money to.
That is a particular problem, because it is the difficulty banks are having in borrowing money from each other that is at the root of the credit crunch.
As they have been unable to borrow from each other, the banks have been forced to borrow from the government instead, to the tune of £200bn over the past year, Robert Peston said.
It has been another tough day for banks elsewhere in Europe, with the government of Iceland taking control of the country's second biggest bank Landsbanki.