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| Banks' share prices fall sharply | Banks' share prices fall sharply |
| (30 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%. | 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 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, 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. |
| class="" href="/1/hi/business/7656387.stm">Icesave savers warned class="" href="/1/hi/uk/7656525.stm">Icesave: Your stories class="" href="/1/hi/business/7482914.stm">Q&A: Deposit protection | |
| 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. | 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. | 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. | 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 comes the day before the Bank of England begins its latest two-day monthly 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 meeting, at which it is widely expected to cut interest rates from the current 5%. |