Lloyds and RBS shares have taken a hit over the last couple of days amid fears of a UK bank levy and pressures from the eurozone.
Lloyds Banking Group were down, and RBS and Barclays shares dropped too. HSBC also fell and overall the FTSE 100 was down 0.92 per cent this morning.
Shares began to slide yesterday following the weekend press reporting that the Financial Services Authority had begun new tests to see whether the banks can survive the European debt crisis if it deepens.
The sell off was spurred by Hungary’s announcement that they could be facing a similar debt crisis to that in Greece, which panicked investors and saw the Hungarian currency fall 6 per cent against the euro.
Although Prime ministerial spokesman Mihaly Varga later said that his comments about the country’s finances had been ‘exaggerated.
Another factor weighing heavy on investors was George Osborne’s decision to go ahead with plans to impose a UK banking levy despite failing to gain support at the G20 summit.
The levy would take into account the bank’s balance sheets, meaning Lloyds and RBS would face the biggest bill if it goes ahead.
However, speaking to Citywire, Bruce Packard, analyst at Seymour Pierce, believes chancellor George Osborne's plans to press ahead with a tax on UK-based banks may be diluted.
“Without international agreement, it’s likely that the tax would have to be watered down though, so as not to disadvantage UK banks versus international peers,” he said.
© Fair Investment Company Ltd