With Angelique Ruzicka, finance editor
It has been a dismal week. News of yet another bail-out has sent the market into frenzy. As Insurance Times went to press, the government unveiled measures to encourage banks to lend to individuals and businesses. The £50bn plan, which allows the Bank of England to buy assets directly from firms, is meant to provide insurance against banks’ “toxic” debt.
The big four high-street banks suffered the most. Shares in Royal Bank of Scotland (RBS) plummeted by 64.36% to 19.60p over the week.
The slump followed the bank’s announcement that it expects to record losses of £7bn to £8bn for 2008. RBS has warned of further write-downs of £15bn to £20bn. Barclays and Lloyds TSB also suffered as shares dropped 45.99% and 41.72% respectively. HSBC’s price fell 19.10% to 516.75p.
Weaker bank shares have affected other financial services companies on the London Stock Exchange. Many listed insurers reported large drops in share price – the exceptions were Amlin, Hardy and Culver, which managed small rises. The hardest hit insurer was Aviva, with a 20.38% fall.
AIM-listed insurers and brokers had a less tumultuous week, although shares in Advent Capital dropped 11.11% to 120p.