Bank bailout "overshadowed" by RBS shares

Yesterday's announcement that the Royal Bank of Scotland's (RBS) shares had fallen 70 per cent has "completely overshadowed" the bank bailout plan, an industry expert has suggested.

Despite receiving £32 billion in funds from the government and other sources, RBS' capitalisation is now less than £5 billion, explained senior currency strategist at HiFX Bob Munro.

This latest news has caused many traders to sell their stocks in other UK banks, he continued.

Mr Munro added that another factor to consider was that the currency exchange rates were not favourable towards the pound.

On Friday, sterling had fallen to a seven-year low against the American dollar at 1.3860 and had also dropped from 1.13 to 1.08 against the euro.

Mr Munro said: "This major escalation of the credit crunch in the UK has prompted traders to punish sterling, sending it into a tailspin."

He concluded that with the current market so volatile it would be unlikely for any traders to adopt a contrary opinion on the British currency.

HiFX was founded in 1998. Last year it advised and executed over £20 billion in foreign exchange.