RBS, the people's bank, fell in value on the FTSE by approximately 5% in early trading as a result of fears over its exposure to Ireland.
Ulster Bank, part of RBS, made a loss of £176M in Q3 and there are worries that Ireland may be forced to ask for a "Greek" bailout from the European Union/IMF.
Markets have a "herd mentality" and react to certain situations with fear and greed, depending on the nature of the situation. In this particular case market sentiment towards Ireland has not been helped by European commission president, Jose Manuel Barroso, who said:
"What is important to know is that we have all the necessary instruments in place now to support Ireland if necessary."
Doubtless well intentioned, but it will exacerbate fears (found or unfounded) over Ireland's economy. The IMF was forced to deny yesterday that Ireland has asked for a bailout.
To add to the EU's woes, Greek public finances showed a deficit of Euro 17.4BN in October (a fall of 30% compared to the same period in 2009). However, the target reduction was 32%.