Barclays plunges amid new worries over bailouts bill

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The bank's stock fell for the ninth day running, losing nearly 18%, or 10.4p, at 48.8p.

The fall came despite an interview last night with Varley in which he declared his confidence that Monday's government bailout plan would work.

However, he said there was nothing he could do to stop the rot in Barclays' shares, which have lost more than two thirds since 12 January amid fears that it would need to tap the government for more cash or possibly even be nationalised.

Meanwhile, the Government came under increased pressure over its multi-billion pound schemes to bail out the banking system, as it emerged today that Britain could let the banks off more lightly than the White House did Wall Street firms.

Plans said to be under consideration at the Treasury would leave the UK taxpayer to underwrite many hundreds of billions of pounds of potential losses - more than previously thought.

Chancellor Alistair Darling plans to use taxpayers' money as insurance against losses from banks' so-called "toxic assets". It is aimed at reassuring potential investors that it is safe to do business with British banks again.

The scheme is based on a similar plan in the US. However, it emerged today that, while the White House has demanded that banks shoulder the first 8% of their losses, the British Government, is considering setting the threshold at just 2%. That smaller "excess" in the insurance policy could end up costing taxpayers billions of pounds.

It is difficult to quantify the additional burden a 2% "first loss" scheme could expose the taxpayer to, but a Merrill Lynch report suggests that if the Government insured £115 billion with a first loss of 10%, it would cost £27 billion. The lower the "first loss" threshold, the larger the cost to the Government is likely to be.

MPs on the Labour-dominated Treasury Select Committee today urged Darling to state the cost of his bailouts.

A Treasury spokesman said: "The government has not yet set a fee for this scheme and will do so when it has discussed with the banks the value of the assets and the risks they present."