View the article online at http://citywire.co.uk/money/article/a875881
FTSE falls as bank shares slump and oil snaps rally
FTSE falls into the red, led lower by banks amid financials sell-off and a fresh slump in oil price.
Update: The FTSE 100 has fallen into the red in the afternoon's trading, led lower by a slump in banking shares and a fresh slump in the oil price, which snapped the sharp rally that began on Friday.
The UK blue-chip index fell 40 points, or 0.7%, to 5,862 with Lloyds (LLOY) among the biggest fallers, down 5% at 63.5p after analysts at JPMorgan cut their target price on the stock.
Banks were also caught up in a broader sell-off of financials across global stock markets. Royal Bank of Scotland (RBS) fell 4.4% to 250.8p, Barclays (BARC) dropped 4.3% to 182.7p, Standard Chartered (STAN) dipped 2.6% to 475.8p and HSBC (HSBA) was down 1.6% at 471.8p.
Adding to the bad news for banks were fears of a regulatory clampdown over IT failures and the prospect of more compensation for victims of interest rate 'swaps' mis-selling.
Treasury Select Committee chairman Andrew Tyrie has written to City regulators the Financial Conduct Authority and Prudential Regulation Authority over the banks' IT failures, according to the Financial Times.
'Every few months we have yet another IT failure at a major bank,' said Tyrie in a letter to PRA head Andrew Bailey. 'Someone - probably the head of the PRA - needs to assume a leadership role, bring together those most involved among regulators and government agencies, and ensure that there are improvements at the banks.'
The news comes as a landmark case against banks' mis-selling of interest rate swaps to small businesses reaches the courts. Holmcroft, an Isle of Man property company, has brought a judicial review of Barclays' compensation scheme that begins today, according to the Telegraph.
The FTSE 100 was also hit by a fresh fall in the oil price, which gave up some gains from Friday's 10% rally as record high production in Iraq threatened to exacerbate fears of oversupply.
Oil rallied to a high of $32.78 by the early hours of the morning, on the expected boost to demand from the cold snap in the US and after investors shorting oil rushed to close their positions.
But news that Iraq was producing up to 4.1 million barrels of oil a day, a record high, sent the price down 3.1% on the day to $31.17.
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by Gavin Lumsden on Oct 21, 2016 at 17:18