Barclays' shares tumble due to fines fear
Fears over the potential for multi-billion pound fines and damages from the industry's rate-rigging scandal sent banks' shares tumbling today.
Barclays plunged as much as 17%, wiping about £4 billion from its market value, as concerns mounted that the £290 million fines imposed on the bank could be dwarfed by the cost of lawsuits.
The shockwaves were felt throughout the sector as speculation suggested the interbank lending rate scandal was set to engulf other British banks.
Royal Bank of Scotland dropped 12%, Lloyds Banking Group fell 7% and HSBC was 4% lower.
Sandy Chen, banking analyst at Cenkos Securities, said he was braced for billions of pounds in fines and damages across the sector.
He said: "The cost of lawsuits related to the Libor rate scandal will likely dwarf the £290 million fine imposed on Barclays - and since Royal Bank of Scotland, HSBC and Lloyds Banking Group have also been named in lawsuits, we expect they will also face significant fines and damages. We are pencilling in multi-year provisions that could run into the billions."
Mr Chen said recent disclosures on interest rate derivatives gave an indication of each bank's potential exposure to the rate scandal.
RBS reported £422 billion, HSBC reported $513 billion (£328 billion) and Lloyds recorded £43 billion, according to Mr Chen.
Analysts at Killik & Co agreed the interbank probe was likely to pull in other UK banks, but said Barclays should be able to withstand multibillion-pound damages.
They said: "Some estimates are that potential damages could run into the several billions of dollars, certainly damaging to Barclays but not too significant in the context of core tier one capital of £43 billion and annual net income over £3 billion."
The interbank lending investigation is the latest blow to the reputation - and shares - of Britain's banks, coming just days after RBS suffered an embarrassing computer crisis.
Last week most of the major players also suffered a ratings downgrade by agency Moody's and the sector is also reportedly facing a formal investigation over the sale of complex interest rate swaps to small and medium-sized businesses.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Fearne Cotton quits Radio 1 after ten years for 'family and new adventures'
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...