Nervous investors have wiped more than £90 billion off the value of Britain’s eight leading banks in the past nine months on fears that they are heading for major credit losses, an analysis by The Times has found.

The two biggest casualties have been Barclays, which was hit yesterday by false rumours that it was poised to write down £10 billion, and Royal Bank of Scotland, also seen as exposed to highly geared credit markets.

The rumours about Barclays saw its shares plunge more than 9 per cent at one stage yesterday, leading to them being temporarily suspended.

Meanwhile it emerged that the damage done to London’s reputation by the Northen Rock crisis will be discussed at a meeting between financiers and Alistair Darling, the Chancellor, next week.

Barclays, which denied the latest speculation, has seen its market value tumble by £21.1 billion since February 7, when its rival HSBC first gave warning about its exposure to the American sub-prime downturn. Despite efforts by senior Barclays figures to reassure shareholders in recent months, its shares have fallen from 763p on that day to as low as 442p yesterday, a slide of 42 per cent. The bank’s market value, which stood at £53.4 billion in February, has fallen to £32.3 billion.

Diving bank prices compare with a remarkably resilient showing by the FTSE 100 over the same period. London’s blue-chip stock index closed at 6,370 on February 7. Yesterday, the FTSE ended at 6,304.9, a fall of 65.1 points, or just over 1 per cent.

Barclays’s sliding share price was one of the main reasons it lost out to RBS in its effort to buy ABN Amro, the Dutch banking group that would have turned the UK’s third-largest bank into a top-five global player.

Barclays shares rallied after it issued a formal denial of the writedown rumours. “There is absolutely no substance to these rumours,” a bank spokesman said. The shares finished the day 11½p lower at 474½p.

RBS, while victorious in the fight for ABN, has been the biggest loser in terms of market value. It has tumbled from 691½p in February to a low yesterday of 387½p, knocking £29.4 billion off its market capitalisation.

HBOS, dominant in the UK mortgage market, has fallen in value by £14.5 billion since February. The bank lost market share in mortgages during the first quarter, but is also exposed if the American housing downturn spreads to this side of the Atlantic.

HSBC, forced into its first profit warning by the credit crisis, is worth £11.8 billion less than it was in February. The UK’s biggest bank and one of Europe’s largest by assets, it still has a market worth of £100.7 billion. Other banks to fall foul of market nerves include Bradford & Bingley, the mortgage lender, Alliance & Leicester and Lloyds TSB. Valuations of these three have fallen by just over £10 billion in the past nine months.

Alex Potter, an analyst at Collins Stewart, has been bearish on the UK banking sector all year, although he retains a “buy” recommendation on Barclays. He said that if Barclays and other banks were on course to “materially miss consensus”, they would have to notify the stock market formally.

“That said, there is a lot of fear out there,” he added. “It is a pretty irrational market. People just go online and check out the credit indices. They see even decent triple A-rated paper is trading at pretty big haircuts.”

Northern Rock, the Tyneside mortgage lender, has been the highest-profile casualty of the credit market rout, forced to seek emergency funding from the Bank of England.

Rock, which is negotiating a sale or possible break-up, was worth £5.2 billion at the start of the year before its overambitious mortgage expansion drive ran out of steam. Yesterday, it was valued at just over £620 million.

The Timesanalysis compared banks’ prices at lunchtime yesterday with closing share prices on February 7.

Additional reporting by Peter Stiff

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