Belfast Telegraph

Bank shares hit by rescue fears

Bank shares have come under pressure in the UK and US amid the uncertainty over the details of the Irish rescue package deal.

The London-based FTSE 100 Index ended nearly 1 per cent lower on Monday, as investors fretted over the impact of the crisis on other lenders.

The Irish government is putting the finishing touches to a drastic 15 billion-euro savings plan after Taoiseach Brian Cowen defied calls for a snap election.

He called for solidarity on the 15 billion euro four-year road map to recovery due to be announced today and the estimated 90 billion euro bailout loan from the International Monetary Fund and Europe.

Part-nationalised UK bank Royal Bank of Scotland, which is seen as being the most vulnerable in terms of Irish lending through its Ulster Bank subsidiary, fell nearly 5 per cent while shares in fellow taxpayer backed Lloyds Banking Group dropped 4 per cent.

On New York's Dow Jones industrial average, Wall Street heavyweights Goldman Sachs Group ended up down more than 3 per cent and Bank of America 3 per cent lower.

Fears the debt troubles would soon erupt in other embattled eurozone countries, such as Portugal and Spain, also dragged the euro lower against the pound and dollar before the currency rallied ahead of Mr Cowen's statement.

The 150-page four-year plan will contain significant reforms to the tax system, with new levies in property and water on the cards and cuts to social welfare.

It was being inspected by experts from the IMF and European Commission.

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