RBS

The Royal Bank of Scotland (RBS) has been labelled the "most vulnerable" bank in Europe by Credit Suisse, in a note which also warns it may need further state aid.

Banks shares extended losses this afternoon as Fitch Ratings downgraded Lloyds and RBS' long-term credit rating from AA- to A and placed Barclays on a negative watch.

The UK government is concerned Royal Bank of Scotland will need a further injection of taxpayers' cash in the event of a broad recapitalisation of Europe's banking sector, the FT reports.

The FTSE 100 is extending early losses after data from the vital UK services sector showed the largest decline in activity in a decade.

Proposals to ring-fence UK-based banks could dent profits by up to 15% within three years, according to Morgan Stanley research, the Telegraph has reported.

The cost of buying insurance on debt issued by the Royal Bank of Scotland has hit a record high as fears over bank funding return to plague markets.

Banks added to market woes last week with the UK's major players reporting a raft of losses prompted by PPI claims and the European debt crisis.

Royal Bank of Scotland has blamed the European crisis and PPI claims for £1.4bn losses in the first half of 2011.

Royal Bank of Scotland is planning to axe 2,000 investment bankers' jobs over the next eighteen months, as it completes the integration of ABN Amro.

UK banks were not among the eight institutions to fail the European stress tests on the sector.