RBS shares plummet by 25% as worldwide recession looms

Published on Friday 10 October 2008 10:25

ROYAL Bank of Scotland shares plummeted by 25 per cent today as a fresh wave of turmoil hit global stock markets.

Banking stocks were among the biggest victims on a desperate day for markets worldwide as speculation mounted over the billions they may need to strengthen their finances.

After losing 25 per cent today Royal Bank of Scotland is down a mammoth 61 per cent this week, and Halifax Bank of Scotland fell 19 per cent, and 37 per cent over the week. Standard Life shares dropped 10 per cent.

Barclays tumbled 14 per cent, making a 42 per cent slump in the past seven days.

The panic came amid little sign that Government efforts to rescue banks on Wednesday with a 400 billion package of capital and guarantees had eased the thaw in frozen money markets.

Manoj Ladwa, senior trader at ETX Capital, said: "Markets are normally held in equilibrium by the balance of fear and greed. But at the moment, greed has gone into hiding and fear rules the roost."

Stock markets worldwide were gripped by the same fear.

London's FTSE 100 Index endured its worst week since the Black Monday crash of 1987.

Recession panic sent investors stampeding for the exits as the Footsie tumbled 8.9 per cent – surpassing even Monday's record sell-off.

The Footsie has plummeted 21 per cent over the week – wiping more than 250 billion off the value of top-flight stocks in the process.

The index eventually finished below the 4,000 mark at 3932.1 – its lowest close for more than five years.

The 21 per cent fall comes close to the 22 per cent slide seen by London's leading shares in the aftermath of Black Monday.

Following heavy overnight declines in Asia, screens turned red in the City as the London market approached falls of 10 per cent at one stage. A dire start to US trading offered no respite.

The Dow Jones Industrial Average, which fell more than 7 per cent yesterday, tumbled as much as 8 per cent during a volatile early session.

City watchers were confounded by the falls ahead of crisis talks among the G7 finance ministers this weekend.

David Jones, chief market strategist at IG Index, called it "another ugly day".

"There is a real sense of despair... it is difficult to see what can be done to effect a handbrake turn in sentiment in the short term," he said.

CMC Markets' James Hughes added: "It is just utter panic."

Across Europe, France's CAC 40 and Germany's Dax were also showing losses of 7 per cent and 8 per cent respectively amid the carnage.

Meanwhile, the UK Government action is set to lead to Scotland's two national banks being 50 per cent public-owned, it was claimed today.

RBS, valued at 16.55 billion, is expected to take 8bn from the Government, while HBoS, worth 16.55bn, is expected to take around 5bn.

&#149 Financial crisis: City giant Standard Life fit to fight global storms