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| Bail-out fears hit banking shares | Bail-out fears hit banking shares |
| (20 minutes later) | |
| Shares in major UK banks have fallen sharply amid fears that more financial institutions will need to be bailed out by the government. | Shares in major UK banks have fallen sharply amid fears that more financial institutions will need to be bailed out by the government. |
| Worst hit was Barclays, which fell 25% while Royal Bank of Scotland, in which the UK government has a near-60% stake, closed 13% lower. | Worst hit was Barclays, which fell 25% while Royal Bank of Scotland, in which the UK government has a near-60% stake, closed 13% lower. |
| Elsewhere, US bank Citigroup suffered a big quarterly loss, while Anglo Irish Bank was nationalised by Dublin. | Elsewhere, US bank Citigroup suffered a big quarterly loss, while Anglo Irish Bank was nationalised by Dublin. |
| US giant Bank of America also received a $20bn (£13.4bn) bail-out package. | |
| Much of the fall in UK bank shares came in the last hour of trading in London, as worries grew in European markets that the latest US government rescue signalled that Washington's efforts were failing to stabilise the financial sector. It has become obvious that the banking sector needs more capital globally David Buik, BGC Partners | |
| Dealers said there was no single reason for the sharp fall in share prices, but that short-selling had also hurt the sector after the expiration of a ban on the short-selling of financial shares. | |
| "The shorting ban has been lifted and I guess the short guys have been sharpening up their tools and looking to see who they'll have a pop at next," said Numis Securities analyst James Hamilton. | |
| Jittery mood | |
| Barclays shares ended at 98 pence, their lowest level since 1993. Its shares have lost 45% of their value this week. | |
| Uncertainty about the format of a new UK government plan being worked on to boost bank lending added to a jittery mood. | |
| Possible options could include fresh capital injections into banks or more government guarantees on toxic assets. | |
| A plan could come as early as next week, with state guarantees to get credit moving again high on the agenda. | |
| David Buik of BGC Partners said: "It has become obvious that the banking sector needs more capital globally." | |
| Commenting on Barclays and HSBC, which have so far decided not to take government aid, he said in the end they may have little choice. | |
| "I suspect they will have difficulty raising further private capital in this climate if they need it." |