Britain’s banks led a fall on the FTSE 100 last night as just one of Britain’s 350 top listed companies reported an increased share price . The likes of Barclays, HBOS and HSBC led a 6 per cent drop in the FTSE 100, which reached a five year low of 3814 at 10am. Both Barclays and HSBC’s share prices fell by 10 per cent, whilst HBOS were down by 14 per cent at 62.7p.
Alliance Bernstein warned that bank share prices may hit rock bottom either side of the New Year. Their analysis of 15 ‘banking crises from history suggests that banks hit trough valuations three to four months after government intervention. History suggests recovery to a price to book ratio of 1 could take a further year and that the surviving banks were those that refused government funding. The exception is where all banks had to accept government funds as in the US and France. Most successful historic bank bail-outs included a blanket guarantee of all banks' liabilities. However, European guarantee funds have an aggregate volume of over €1 trillion and could go up to €1.5 trillion, enough to deter a 'trade against the government'’.
Banks Lead FTSE Fall
Banks Lead FTSE Fall
Fri, 24 Oct 2008
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