Sector movers: Banks hit by US sub-prime lawsuit

5th Sep 2011 16:01

The banks were among the heaviest fallers on Monday on the back of concerns over the multi-billion pound legal case regarding the subprime mortgage crisis in the US. There were no sectors in the blue as London suffered a steep sell-off.There was speculation that the 17 banks being sued could be set for a payout of more than £5bn to the Federal Housing Finance Agency (FHFA) in damages over the quality of loans sold to struggling mortgage titans Fannie Mae and Freddie Mac in the lead up to the financial crisis.Royal Bank of Scotland (RBS), which has emerged as one of the main targets of the suit, was trading 12% lower at 21.86p by 16:05. Shares in Lloyds and Barclays were also sliding.Shares in banks were not helped by a report that the ratings agency Moody's is set to lower its ratings on Lloyds, RBS and other British banks. Sky News reported over the weekend that Moody's is awaiting the Independent Commission on Banking's (ICB) report on September 12, which is expected to recommend the imposition of robust firewalls and more stringent capital requirements. BCTop performing sectors so far todayBottom performing sectors so far todayIndustrial Metals & Mining 5,526.57 -6.51%Banks 3,326.34 -4.83%Life Insurance 3,548.32 -4.51%Health Care Equipment & Services 3,390.01 -4.40%Chemicals 6,157.04 -4.05%