Wall Street shares fall in response to Lehman collapse
Wall Street shares plunged today in response to the collapse of investment banking giant, Lehman Brothers.
Black Monday sent shockwaves throughout global markets after the UK’s FTSE 100 index fell 3.92%, France’s Cac 40 index lost 3.78% while Germany’s Dax slumped 2.74%.
HBOS, the UK’s largest mortgage lender, saw its shares plummet by 17.5% to 232.75p at the close of trading. The bank is heavily reliant on borrowing in the wholesale markets for funding.
Lehman Brothers, the fourth largest investment bank in the world, announced it was filing for bankruptcy after it failed to find a solution to its problems after a weekend of rescue talks with Barclays and Bank of America.
Last week, the bank announced bigger than expected losses of $3.9 billion for the third quarter. Furthermore, its share price has lost over 70% over recent months.
Lehman staff in the UK have packed up their desks and left the bank’s Canary Wharf offices. The 158-year-old institution employs over 4,000 in London and a further 1,000 at its offices in High Wycombe.
The benchmark Dow Jones index lost nearly 267.8 points at 11,154.2. In Singapore, the STI dropped 3.3% – a two-year low.
On the Dow Jones, the biggest faller was insurance giant, AIG, who have asked the Federal Reserve for a bridging loan of $40 billion (£22 billion) in a bid to shore up its balance sheet.
As a result of the global financial turmoil, oil prices fell further below $100 a barrel today to a seven-month low.