AROUND £53bn was wiped off the value of UK stocks yesterday as fears returned over the health of the banking sector.
The FTSE 100 Index plunged by 5%, down 218.5 points to 4180.6.
Reports that HSBC and Barclays – which snubbed the Government’s bank bail-out last year – may have to raise fresh cash spooked investors.
Blue-chip banks suffered losses of up to 18% in London, dragging the wider Footsie lower, but markets globally were also deep in the red.
Share falls in London were dominated by banks, which were hit by worries that they could be forced to turn to the Government for more capital.
There are also worries that further shares misery may be in store for UK banks when the City watchdog lifts its short-selling ban on financial stocks at midnight tonight. Short-selling is believed to have been responsible for driving down bank shares so heavily last year, and the removal of the ban could see a repeat of the dramatic losses, some have cautioned.
