LONDON — The shares of leading U.K. banks fell during early London trade this morning following news that Cyprus had implemented a bank levy that would charge depositors up to 10% of their savings.
Barclays (LON:BARC) slid 11 pence to 309 pence, Lloyds Banking (LON:LLOY) lost 1.3 pence to 49.2 pence while Royal Bank of Scotland (LSE:RBS) dropped 10 pence to 298 pence as investors responded to a fresh wave of eurozone debt fears.
The FTSE 100 index dived 62 points to 6,427.
The Cypriot bank levy is part of a wider, 10 billion-euro bailout negotiated by the Mediterranean island with the European Union and International Monetary Fund over the weekend. Cypriots with up to 100,000 euros in their accounts will pay 6.75%, while those with more face a 9.99% charge.
In return, Cypriot savers will receive shares in their bank.
Savers with deposits in the U.K. arms of Cypriot banks are reportedly unaffected by the levy. The U.K. government has also pledged compensation to any U.K. military personnel that suffer a charge.
The news from Cyprus may well test the resolve of U.K. bank-sector shareholders, who have enjoyed racy returns since the summer of last year.
Indeed, from trough to peak during the last year or so, the shares of Lloyds Banking (LON:LLOY) have lunged from 25 pence to 55 pence, RBS has rallied from 196 pence to 366 pence while Barclays (LON:BARC) has bounced from 151 pence to 327 pence.