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Bank fears send shares plunging
Simon English, Robert Lea and Nicholas Cecil14.01.09
FEARS that Britain's banks remain in crisis led to a day of heavy losses on the stock market today.
The FTSE-100 sank 230 points to 4160 in a frantic and nervy afternoon's trading, wiping £55 billion from the value of the top shares.
Barclays was one of the biggest losers as speculation swept the City that the bank will need fresh injections of capital just to stay solvent. HSBC sank on similar concerns.
Until this week both were seen as a source of strength. Neither has resorted to government bail-outs to bolster finances.
Barclays fell 24.4p to 141.5p, while HSBC lost 69p to 571p. Barclays is axing another 2,100 jobs in its high-street operations, taking the total in the last few days to 4,600.
At the same time a senior minister claimed she could see “green shoots” of recovery.
Asked on the ITN lunchtime news when she expected to see the first signs of recovery, Business minister Baroness Vadera said: “I'm seeing a few green shoots but it's a little too early to say exactly how they will grow.”
Her remark echoed former chancellor Lord Lamont's much-derided gaffe at the Tory party conference in 1991 that the “green shoots” of recovery were evident.
The FTSE has now fallen for six days on the trot, as any hopes that the recession might be short-lived were wiped away.
It is down 478 points since 6 January — a 10 per cent drop that has wiped £113 billion off the value of Britain's top companies in the last week. Some of those companies have been slashing jobs to stay afloat.
Following 4,000 job cuts announced yesterday by a number of companies, catalogue group Freemans Gratton said this afternoon that it may be forced to let up to 3,800 employees go.
Hundreds at Citigroup in Canary Wharf were facing redundancy as the giant bank moved towards breaking itself up. Citi employs 10,000 in London at the moment.
Other job losses came at Jaguar Land Rover, which said it would axe 450 jobs, including 300 managers. Administrators for music, DVD and games retailer Zavvi closed another 18 UK stores with the loss of 353 jobs.
Liberal Democrat shadow chancellor Vince Cable said of Baroness Vadera's comments: “She is clearly living in a parallel universe if she think the economy is beginning to recover. With thousands of jobs being lost every day and many families at risk of repossession, recovery is sadly a long way off.”
Reader views (8)
Here's a sample of the latest views published.
The financial services industry are giving jobs to foreign citizens despite very talented people available in UK.
- Guddu, London
I am approaching 65 years of age and I well remember the time when the local bank manager was a pillar of society. Indeed, the local banks (Lloyds, National Provincial, Westminster etc) were all highly respected.
Today, we see nothing but corporate greed. You are quite lucky if your bank manager is not a teenager and the service to customers is absolute rubbish.
I for one, am delighted to see the directors of these diminished institutions facing the ignominy of government intervention or worse.
The banks have created this global recession and should be held accountable.
- Dudley, Dorking
Persemillion - good luck with that...
- Jim, London
Looks like another good day for the boys at he Stock Exchange churning over everyones stock options. Why not scare everyone into recession? Maybe it's about time the overpaid, excessive bonus boys and girls were made more accountable about their greed motives....
- Bernie, Iver England
Jim - I've got a £350,000 mortgage with HSBC so this is great news.
- Persemillion, London N17
"£50,000 of savings with the bank" and "salary of £75,000", I reckon this pretty much excludes the vast majority of people.
- Gavin, London
I support responsible lending, and am against 100% mortgages, but 1st timers need something available closer to the 20/25% deposit level, and reasonable rates to realistically be able to purchase their own property.
- Sukh, london
What a load of hot air. Please let me deposit my 50k with you in order to earn next to nothing...
- Jim, London
