British banking stocks have slumped despite the British government announcing its second bank rescue plan in three months.
The government has thrown its troubled banks a second multi-billion-pound lifeline in three months in a bid to try to get banks lending again.
Banks will be able to insure themselves against losses on their riskiest assets.
Britain will also provide a guarantee on their debt and set up a 50 billion pound fund to buy up high-quality securities such as corporate bonds to get cash flowing again.
The latest plan will result in the government increasing its stake in Royal Bank of Scotland after the bank announced the biggest loss in British corporate history - 28 billion pounds in 2008.
But a lack of detail in the package and fears it is one step from full nationalisation sent shares skidding.
Royal Bank of Scotland crashed 70% to 10.5 pence, its lowest level for more than 25 years, and shares in other banks all slumped heavily.
Lloyds Banking Group, already 43% owned by the government, fell 30%.
Britain has been forced into a second rescue after state injection of 37 billion pounds to recapitalise three of the biggest banks last October failed to get credit moving again.
As part of the package, the Bank of England gets a new 50 billion pound facility to buy high-quality assets and will be able to use this framework to boost the money supply - so-called quantitative easing - in order to boost the economy as it runs out of room on on interest rates.
The central bank cut interest rates to a record low of 1.5% this month and, like central banks around the world, has been looking at how it can ease monetary conditions once rates cannot fall any further.
Prime Minister Gordon Brown said the Bank of England would give more details on Tuesday.
Businesses in trouble
Meanwhile, an insolvency expert says the number of distressed British businesses more than trebled in 2008 compared with the previous year.
Begbies Traynor says more than 5,600 companies faced critical problems in the fourth quarter of last year - a rise of 82% on the same period the previous year.
The increase for the whole of 2008 was 245%.
The number of distressed companies in the advertising, transport, communications and property sectors rose more than 150% in the fourth quarter.
The rise for retail companies was 81%, and Mr Traynor says this is set to accelerate as the shock waves of the global banking crisis spread through the economy.