Market jitters return as hunt begins for £100m rogue trader behind fake 'bank collapse' rumours

UK Daily Mail
Thursday, March 20, 2008

Market jitters failed to ease today as the hunt continued for the rogue City traders who made hundreds of millions of pounds amid a swirl of rumours about Britain's biggest mortgage lender.

The FTSE plunged by almost 60 points shortly after opening. By 8.15am, it was down 58.2 to 5487.4 as blue chip stocks carried on their descent into the red, although by mid-morning it had rallied slightly to 5507.2.

Halifax Bank of Scotland (HBOS), which was the centre of yesterday's financial storm, was making tentative gains as bosses attempted to quash the rumours and ease investor nerves.

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But a profit warning from investment bank Credit Suisse did little to help fragile sentiment among investors, as did heavy overnight falls on Wall Street which saw the Dow Jones close down almost 300 points.

Global markets were also volatile, with the Hang Seng index in Hong Kong closing down 758.7 points at 21108.2 while the Straits Times index in Singapore was down 8.3 points to 2824.9.

Bank of England governor Mervyn King will meet banking chiefs later today, where he is expected to face demands to pump more cash into money markets to ease the deepening credit crisis.

But the extraordinary events surrounding HBOS shares is also sure to feature on the agenda.

Its share price dropped as much as 20 per cent at one point yesterday after speculators began spreading malicious, false rumours about the bank's imminent implosion.

A single trader may have made £100 million from the collapse, which has been dubbed a "modern day bank robbery" and is being investigated by the Financial Services Authority (FSA).

The drama started to unfold at 8.31 when shares in HBOS began to wobble. What followed was one of the most remarkable morning's trading in recent stock market history.

Full article here.

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