Tuesday, May 20, 2008

UK banks have rough waters ahead

Mortgage debt fears hit banks' shares
By Katherine Griffiths, Financial Services Editor
Last Updated: 1:33am BST 20/05/2008

Bradford & Bingley's (B&B) shares slumped to a record low amid fresh fears about the mortgage market.

Jitters about a potential increase in bad debts also hit other UK banks, including HBOS, owner of Halifax and Bank of Scotland, and Royal Bank of Scotland.

The further slide in banking shares came as investors focused on problems that could lie ahead for the UK's banks.

Sandy Chen, an analyst at Panmure Gordon, warned that the macroeconomic outlook for the UK has deteriorated.

He said that while investors have been worried about British banks' exposure to the US sub-prime market through their investments in credit derivatives, the real fear now will be over the bad debts that UK banks could face.

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