Bank shares fall amid stress test worries
Even though just 24 hours ago it was claimed that the stringent stress tests being carried out by the Financial Services Authority (FSA) would at the very worst secure the future of the UK banking industry, many analysts have changed their minds overnight. While the criteria released by the FSA were deemed to be overcautious and effectively worst case scenario, many analysts believe on reflection that the forecasts used were merely on the boundaries of current opinion.
When you consider the details, which we published yesterday, it is a damning indictment of the UK economic arena that such disastrous figures could actually be considered by analysts. As a consequence we saw a sell-off in banking shares with investors running for the hills, concerned that the financial strength of many UK banking corporations could be at risk if the economy was to take a further downward step.
The banking sector is the perfect reflection of public and investor confidence at this moment in time as the volatility of leading banking shares has been significant to say the least. There is a concern that analysts can actually talk themselves, and the economy, into a further downward spiral which could have serious consequences for the UK as a whole and the UK credit rating.
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