This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7656357.stm

The article has changed 17 times. There is an RSS feed of changes available.

Version 12 Version 13
Banks' share prices fall sharply Bank shares take a big pounding
(40 minutes later)
Banking shares have fallen in London amid news that the bosses of big banks had met Chancellor Alistair Darling to discuss fundraising. UK banking shares have plunged on fears that more financial institutions may need government assistance.
HBOS dropped 37%, Royal Bank of Scotland (RBS) fell 34%, Barclays shed 11% and Lloyds TSB was down 9%. HBOS dropped 42%, Royal Bank of Scotland (RBS) fell 39%, Barclays shed 9% and Lloyds TSB was down 13%.
The banks called on Mr Darling to make a proposal how to restore liquidity, BBC business editor Robert Peston said. The bosses of the UK's biggest banks met Chancellor Alistair Darling to discuss financing late on Monday, BBC business editor Robert Peston said.
The Prime Minister, the chancellor and the Bank of England governor will meet at 1700 BST to discuss the crisis.
The chairman of the Financial Services Authority, Lord Turner, will also take part in the talks, which will consider government proposals for stabilising the financial system and longer-term reform.
Downing Street denied it was an "emergency meeting", adding that it would focus on "ongoing action".
Capital
Barclays has categorically denied that it has requested any capital from the UK government.Barclays has categorically denied that it has requested any capital from the UK government.
RBS confirmed that the meeting with Mr Darling had taken place, but blamed the share price fall on two very large share trades taking place, which under stock market rules meant that the shares were temporarily suspended.RBS confirmed that the meeting with Mr Darling had taken place, but blamed the share price fall on two very large share trades taking place, which under stock market rules meant that the shares were temporarily suspended.
Lloyds TSB has declined to comment, but banking sources have said there will be another meeting later on Tuesday. Lloyds TSB has declined to comment.
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 planRescue plan
Monday's meeting was attended by Mr Darling together with Mervyn King, the governor of the Bank of England, and Adair Turner, the chairman of the Financial Services Authority.Monday's meeting was attended by Mr Darling together with Mervyn King, the governor of the Bank of England, and Adair Turner, the 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 blogWhat 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.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."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.
'Get on with it''Get on with it'
But some experienced politicians were convinced that there must be action this week.But some experienced politicians were convinced that there must be action this week.
"The government will inevitably have to recapitalise the banks," Geoffrey Robinson MP, and former Labour paymaster general, told the BBC."The government will inevitably have to recapitalise the banks," Geoffrey Robinson MP, and former Labour paymaster general, told the BBC.
"They really have to recapitalise them this week," agreed Sir Kenneth Clarke MP, former Conservative chancellor of the exchequer."They really have to recapitalise them this week," agreed Sir Kenneth Clarke MP, former Conservative chancellor of the exchequer.
"Everyone knows they're going to have to do it - get on with it," he added."Everyone knows they're going to have to do it - get on with it," he added.
Lending problemsLending problems
Also depressing shares in RBS, which owns NatWest bank, was Monday's news 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.Also depressing shares in RBS, which owns NatWest bank, was Monday's news 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.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.
Icesave savers warnedIcesave: Your storiesQ&A: Deposit protectionIcesave savers warnedIcesave: Your storiesQ&A: Deposit protection
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.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.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.
Landsbanki owns the internet bank Icesave, which has stopped allowing customers to withdraw money. Icesave is thought to have 350,000 customers in the UK and Netherlands.Landsbanki owns the internet bank Icesave, which has stopped allowing customers to withdraw money. Icesave is thought to have 350,000 customers in the UK and Netherlands.
SummitSummit
Finance ministers meeting in Luxembourg have agreed to increase the minimum value of deposits that European countries will have to guarantee from 20,000 euros to 50,000 euros ($68,250; £38,900).Finance ministers meeting in Luxembourg have agreed to increase the minimum value of deposits that European countries will have to guarantee from 20,000 euros to 50,000 euros ($68,250; £38,900).
At the moment in the UK, the Financial Services Compensation Scheme (FSCS) guarantees the first £50,000, but European banks operating in the UK are guaranteed by their domestic scheme.At the moment in the UK, the Financial Services Compensation Scheme (FSCS) guarantees the first £50,000, but European banks operating in the UK are guaranteed by their domestic scheme.
Some of them choose to top up the protection with the FSCS, so if Landsbanki were to fail, the first 50,000 euros would be paid by the Icelandic authorities and any more up to £50,000 would be paid by the FCSC, which would also handle all the paperwork.Some of them choose to top up the protection with the FSCS, so if Landsbanki were to fail, the first 50,000 euros would be paid by the Icelandic authorities and any more up to £50,000 would be paid by the FCSC, which would also handle all the paperwork.
All this comes the day before the Bank of England begins its latest two-day monthly interest rate-setting meeting, at which it is widely expected to cut interest rates from the current 5%.All this comes the day before the Bank of England begins its latest two-day monthly interest rate-setting meeting, at which it is widely expected to cut interest rates from the current 5%.