City Desk

The shares of the Royal Bank of Scotland have taken a hammering in the markets with its share price down 30 % with other banking stocks following suit. A meeting inside Downing Street is taking place to discuss the banking crisis in the UK and globally with new measures expected to be announced.

The London markets are deeply concerned about the health of the British banking institutions and an expectancy that when the government injects an amount in excess of £40 billion it will in return take a stake in banks. RBS and other banks seeking government assistance will ultimately see the shareholders interest demoted and the taxpayer and government elevated.

The FT said "Royal Bank of Scotland was the heaviest faller amid reports that the heads of the UK’s largest banks had approached the government for a capital injection of up to £45bn. RBS’s credit default swaps also widened indicating growing nervousness about the group’s solvency."

It was reported by the BBC that "The Treasury’s current thinking is that it would acquire preferred stock in the banks and take warrants over the ordinary shares.”

The CBI and the BCC has called for an interest rate cut this week by the Bank of England to prevent further job losses and company bankruptcies.