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| Banks' share prices fall sharply | Banks' share prices fall sharply |
| (41 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. |
| Royal Bank of Scotland fell 17%, HBOS dropped 14%, Lloyds TSB was down 11% and Barclays fell 5%. | |
| 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 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 and Lloyds TSB have both declined to comment, but banking sources have said there will be another meeting later on Tuesday. | RBS and Lloyds TSB have both declined to comment, but 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 | 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 | 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. | 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. |
| Lending problems | 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. | 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. | 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. | 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. |
| Iceland rescues LandsbankiQ&A: Deposit protection | |
| Landsbanki owns the internet bank Icesave, which has stopped allowing customers to withdraw money. | Landsbanki owns the internet bank Icesave, which has stopped allowing customers to withdraw money. |
| If Landsbanki were to fail, savers would be entitled to their first £16,000 from Icelandic authorities and then up to another £34,000 from the UK Financial Services Compensation Scheme. | |
| But claims from the UK would all be handled by the UK authorities. | |
| Summit | Summit |
| European Union finance ministers are meeting in Luxembourg to discuss whether they should standardise the value of deposits that they are prepared to guarantee in bank accounts. | European Union finance ministers are meeting in Luxembourg to discuss whether they should standardise the value of deposits that they are prepared to guarantee in bank accounts. |
| Ireland currently has a 100% guarantee, but the EU minimum is only 20,000 euros ($27,000; £16,000). | Ireland currently has a 100% guarantee, but the EU minimum is only 20,000 euros ($27,000; £16,000). |
| It has been suggested that all countries could guarantee up to 100,000 euros to stop people moving their money to banks in other countries. | It has been suggested that all countries could guarantee up to 100,000 euros to stop people moving their money to banks in other countries. |
| The best outcome from the Luxembourg meeting would be for all governments to promise to fill whatever funding gaps emerge at their banks, according to Robert Peston. | The best outcome from the Luxembourg meeting would be for all governments to promise to fill whatever funding gaps emerge at their banks, according to Robert Peston. |
| All this come the day before the Bank of England begins its latest two-day monthly meeting, at which it is widely expected to cut interest from the current 5%. |