UK NEWS

THE HUNT GOES ON FOR ROGUE CITY TRADERS

Mervyn King will meet bank bosses today

Thursday March 20,2008

By Jack Teague for express.co.uk

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THE hunt is continuing to find the rogue city traders who spread malicious rumours yesterday which saw more than £3 billion wiped off Halifax Bank of Scotland's value.

At one point yesterday shares in HBOS dropped by 20 per cent as rumours gathered pace across the city- It's believed that one trader may have made £100 million from the incident.

HBOS slammed the false allegations as “malicious” and “lies” and insisted the bank was one of the strongest financial institutions in the market.

Spokesman Shane O’Riordin, said: “There has been a series of rumours in the market today. A number of ill-founded and malicious rumours about the UK banking system in the markets.

“These rumours have not a shred of substance whatsoever. They are lies.

But he did prais the “decisive action” of the Financial Services Authority to investigate the alleged market abuse.

He said: “It really is time that these people who wish to make money out of spreading lies are brought to book.

“We are one of the most respected names in the retail and capital markets and a strong and secure financial institution."

An FSA spokeswoman said one of the “bizarre” rumours which had been spread around the market was that Bank of England governor Mervyn King had postponed a trip to the Far East because of the market turbulence.

The reality was that Mr King had decided not to go to West Bromwich, although she could not say what this trip had been for.

And as part of the probe into market abuse the she said firms will now be encouraged to record the telephone calls of their staff, a practice that will soon become obligatory.

As well as regulatory powers held by the FSA it can also use the criminal law system against those suspected of committing market abuse.

Mr King will meet with UK bank bosses later today and they are expected to tell him that he needs to reassure creditors that the central bank will provide help if needed.

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