UK banking shares hit by fundraising fears
The UK banking sector has come under more pressure today with many investors fearful that the government will be left with the bulk of new shares to be released. The idea of the rescue package had been to instil confidence back into the sector by effectively putting the government forward as underwriter for the new share issues. With existing shareholders offered the chance to subscribe on a pro rata basis it had been hoped that investors would step forward to increase their holdings at lower levels.
If today's concerns are followed through it looks as though the government will be left with the bulk of new shares for the three banks which are taking public funds. This will put the UK government into something of a quandary as they will have control of four banks and be administering the Bradford & Bingley mortgage book at the same time. After a very strong start, the banking rescue package has hit some turbulence over the last few days and there are concerns about the short to medium term outlook for the UK banking sector.
This concern in the banking sector has been translated into the wider market and seen the UK stock market come under renewed pressure of late after something of a shorter recovery.
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