TICK, tock, dither, dither… Every minute without an announcement yesterday drained confidence out of Scotland's two leading banks.
What was left last night were barely functioning corpses now desperately in need of a massive transfusion, made all the bigger by government dithering.
Institutional investors, weary of another day of delay, gave up the ghost.
They dumped hug
e lines of RBS and HBOS shares on to the market, fearful that an overnight announcement might leave them this morning with a rump of equity so heavily diluted by government preference shares as to be almost worthless.
These were not hedge fund short-sellers or the vilified "spivs and speculators" but long-only institutional investors whose patience had finally run out. With the shares down more than 70 per cent since this crisis began, why, they reckoned, hang around for a total wipe-out along the lines of the nationalisations of Bradford & Bingley and Northern Rock?
It is one thing for Chancellor Alistair Darling to resist being rushed into a rescue of Britain's stricken banking system. But the long delay, between the flagging-up at the weekend of possible state-aided recapitalisation moves and the announcement from Downing Street last night of details to be made available this morning, can be measured in billions of pounds.
Said a banking source close to the talks last night: "To leave such a vacuum at this critical time was dangerously irresponsible."
Business and personal customers alike have been put through a wringer of anxiety. As the day wore on, customers could not help but see the plunging share prices as a proxy for the solvency of their banks – and a threat to their savings.
Particularly worrying for the banks is the effect on big business customers. Some, I understand, are already contemplating a switch to safer havens such as HSBC.
In two days, Scotland's two giant banks have been humiliated and their shareholders all but wiped out
I understand there was broad agreement across the leading banks of what needed to be done.
Balance sheets needed to be strengthened to cope with global conditions that have darkened in recent weeks.
So why the delay?
Now everyone is on a knife-edge anxiously awaiting the details. This is a plan that just cannot afford to fail.
The full article contains 387 words and appears in The Scotsman newspaper.
