Banking crackdown unsettles investors in FTSE

A crackdown on banks overcharging customers for late repayments on their credit cards unsettled investors in London today.

The banking sector was mired in the red after the Office of Fair Trading (OFT) viewed any penalty charge imposed by banks of more than £12 as unfair.

The statement by the OFT meant the FTSE 100 Index lost hold of early gains to be in danger of falling below the 6000 threshold again – off 3.7 points at 6001 by mid-morning.

CMC Markets, a financial spread betting firm, said the losses by the banking sector were equivalent to six points being wiped off the Footsie.

Alliance & Leicester was hardest hit – off 6% or 69p to 1179p – as investors got cold feet at the prospect of a bid approach and took fright at the OFT stance on credit cards.

There was also a 2% decline at Northern Rock, down 25p to 1140p, while HBOS weakened 6.5p to 956p and Royal Bank of Scotland fell 11p to 1857p.

However, oil giant BP was shoring up sentiment after it told investors that daily output totalled 4.025 million barrels between January and March and its refining business showed signs of improving.

BP ticked 4.5p higher to 669p but its trading statement could not inspire investors to buy the stock of its chief UK rival as Royal Dutch Shell eased 5p to 1881p.

In the retail sector, DSG International was ahead by 0.5p at 185p after investors approved of a new strategy that will see the Dixons name disappear from the UK high street.

DSG will use the “Currys.digital” banner for its 190 Dixons stores as it merges its two core operations to create a new 550-shop division.

But the airline industry was experiencing a spot of turbulence after Icelandic investor FL Group sold its 16.9% stake in second-tier carrier easyJet.

Shares in easyJet fell 9% or 33.25p to 324.75p – their lowest level since November – as a bid for the second-largest low-cost carrier disappeared off the radar.

In the top flight, British Airways was 3.5p lower at 350.5p ahead of monthly figures later today that will show how many passengers it carried in March.