Not much to say here really, other than pointing out the prices, circa 14.00 BST:
Alliance & Leicester - Down 146p at 727p
Royal Bank of Scotland - Down 23p at 508p
Anglo Irish Bank - Down €0.95 at €11.65
Allied Irish Banks - Down €1.05 at €16.33
Bank of Ireland - Down €0.65 at €11.35
Banco Espanol de Credito - Down €0.68 at €12.40
Oh, and having momentarily touched a low of 257p, shares in Northern Rock were trading at 275p, down 163p.
As Lex noted on Monday, there is one thing Spain, Ireland and the UK have in common: inflated housing markets. In funding this, banking balance sheets in these countries have expanded at well above the European average, with loan-to-deposit ratios following suit.
But Northern Rock was a special case, with a ratio of over 300 per cent. The liquidity of those banks now under stock market pressure is not necessarily being questioned seriously. Says Lex:
Instead, expectations for profitability are falling. If wholesale funding costs rise, net interest margins will be squeezed and prudent management teams will be forced to put the brakes on asset growth. And beyond the technicalities of funding, there is also the suspicion that the institutions which helped bankroll three of Europe’s biggest property bubbles will be lucky to escape without having to impair some of the loans on their balance sheets.
