Business | Banking

UK seeks to calm jittery markets

HBOS, Britain's biggest mortgage lender, bore the brunt of the rumours, with its shares plunging 17 per cent to a record low of 398 pence at one point.

  • Reuters
  • Published: 00:38 March 20, 2008
  • Gulf News

London: Britain's financial authorities made a rare public move to calm jittery markets on Wednesday, saying they were not aware of problems at any UK bank and would investigate share price moves sparked by unfounded rumours.

Despite a 75 basis point cut in US interest rates on Tuesday - the latest attempt by the Federal Reserve to restore stability after the rescue of US bank Bear Stearns at the weekend - London markets remained volatile.

HBOS, Britain's biggest mortgage lender, bore the brunt of the rumours, with its shares plunging 17 per cent to a record low of 398 pence at one point.

HBOS, owner of the Halifax brand, dismissed the speculation, saying it had an "exceptionally strong balance sheet" and continued to access wholesale funding.

The Bank of England, under fire for failing to react quickly to the near collapse of Northern Rock six months ago, took the rare step of commenting on the rumours. "No meetings have taken place or been scheduled to discuss problems with any institution in the UK," the BoE said.

The Financial Services Authority (FSA) confirmed an earlier report that it would probe the latest share sell-off. "We will not tolerate market participants taking advantage of the current market conditions to commit abuse by spreading false rumours and dealing on the back of them," the FSA said in a statement.

See also Page 53

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