Picking off the banks?

Last Modified: 07 Oct 2008
By: Newsroom blogger

In the morning meeting.

The latest financial developments are dramatic - but bleak.

The UK markets opened 100 points up today, before dropping swiftly. Royal Bank of Scotland shares were down, at the time of meeting, 39 per cent.

The biggest drop I have ever heard of, reckons our economics correspondent.

The silver lining? "Shares have rallied a lot in the last week or so - it's not as though they were at the lowest, and fell further."

'For a prime minister who has a reputation for dithering, it's a bad move.'

Last night bosses of three of the biggest banks - RBS, Barclays and Lloyds TSB - met the chancellor and, it's thought, signalled that they needed capital quickly.

"The markets are picking off the weakest banks. As soon as one goes down, another one gets picked off."

"There's a joke in the city - why wasn't HSBC brought in to save HBOS? Because it was being saved for a much bigger fish. Except maybe that isn't a joke any more."

Our main package tonight will - events permitting - focus on the latest developments in the British banking sector.

But there's also considerable activity in Europe to cover. Icelandic bank Icesave - which has 300,000 British account holders - has suspended deposits and withdrawals from its internet accounts this morning.

EU finance ministers are meeting today, and may agree on a deal to raise the limit at which savings are protected in the event of a bank failure to 100,000 euros.

Our political editor will be looking at this and other possible actions by the chancellor, Alistair Darling, who yesterday made a statement to the Commons about the crisis.

'Adair Turner's gone further than expected in saying the reduction should apply to all greenhouse gas emissions, which will be harder to do.'

"He had to make the statement because it was the first day back after the recess. But he had absolutely nothing to say.

"That's what drives markets wild - it had been built up as a big announcement."

"For a prime minister who has a reputation for dithering, it's a bad move."

"But if he's rushed out something not properly thought out, we'd have criticised him for a kneejerk reaction."

We also hope - time and space permitting - to look at the impact of all this on the real economy. In particular, what the rising number of house repossessions means for families on the ground.

In news of another global threat, climate change committee chairman Adair Turner (and new Financial Services Authority chairman) has said that UK greenhouse gas emissions should be cut by at least 80 per cent by 2050.

His report was brought forward from December because the climate change bill - which currently proposes a statutory 60 per cent reduction in CO2 emissions - is due to go through parliament next month.

"We expected him to recommend 80 per cent rather than 60, but he's gone further in saying that the reduction should apply to all greenhouse gas emissions, which will be harder to do, and that it should include international aviation and shipping."