UK banks tumble as gilt yields hit highest since 1998, budget jitters mount
XLF•UK bank shares fell as British 30-year borrowing costs reached their highest since 1998. The FTSE 350 banks index dropped 4.5%, while NatWest fell 5.4%, HSBC and Lloyds lost 4.4% each, and Barclays declined 4%.
1. Bank shares fall
UK bank stocks fell sharply as a sell-off in government bonds pushed British 30-year borrowing costs to their highest since 1998. The FTSE 350 banks index fell 4.5%, its largest one-day drop since May 5; an index of euro zone banking shares was down around 3%.
2. Budget concerns mount
NatWest shares fell 5.4%, HSBC lost 4.4%, Barclays dropped 4% and Lloyds declined 4.4%. The falls accelerated after a report said the heads of major British lenders had been summoned to meet finance minister John Healey next week ahead of the October 28 budget, as expectations build for possible bank taxes.
