Crisis meeting as top firms in UK suffer £100bn wipeout

Published on Saturday 11 October 2008 11:21

INTERNATIONAL finance ministers are meeting today at the end of a week which has seen £250 billion wiped off the stock market and the FTSE 100 suffer its worst week ever.

A worldwide cut in interest rates, which has been coupled in the UK by the Government's 500 bn package of capital and guarantees, appeared to have done little to thaw the frozen money markets.

Around 100 billion was wiped off the value of Britain's biggest companies yesterday.

Banking stocks were among the biggest victims on a desperate day for markets.

Royal Bank of Scotland shares plummeted by 25 per cent, and the losses put RBS down a mammoth 61 per cent this week.

Halifax Bank of Scotland fell 19 per cent yesterday, and 37 per cent over the week.

Standard Life shares also fell by 10 per cent, while Barclays tumbled 14 per cent, making a 42 per cent slump in the past seven days.

London's FTSE 100 Index endured its worst week since the Black Monday crash of 1987, and on Wall Street, the Dow Jones industrials average of blue chips firms also suffered its worst week ever, falling more than 7 per cent yesterday.

International finance ministers meeting in Washington for the G7 summit today insisted they had a plan to stop the carnage.

US Treasury Secretary Hank Paulson said the US government would follow Britain's lead and buy stock in troubled financial institutions in a bid to stabilise the global markets.

He said: "We are developing strategies to use the authority to purchase and insure mortgage assets, and to purchase equity in financial institutions, as deemed necessary to promote financial market stability."

The US administration received the authority to make direct purchases of stock in banks as part of the controversial $700 bn (410bn) rescue package approved by Congress last week.

It would mark the first time the US government has taken equity ownership in banks in this manner since a similar programme was employed during the Great Depression.

He added that "an aggressive action plan to address the turmoil in the global financial markets" had been agreed by the international ministers.

The G7 ministers – from the US, the UK, France, Germany, Italy, Japan, and Canada – will hold crisis talks with President George Bush at the White House later today.

Ahead of the meeting Mr Darling warned that it was "essential" that the world's leading economies took action to stabilise financial markets.

He said it was not enough to "just talk about these things".