Citigroup, Swiss Banks point to big losses

The Sunday Telegraph said the UK Treasury had given two U.S. hedge funds -- JC Flowers and Cerberus -- permission to start takeover talks, sparking fears of a fire sale of its assets that would leave shareholders with virtually nothing.

Last month, thousands of panicked savers queued to get their money out of Britain's fifth-biggest mortgage lender, after it had to seek emergency funding from the Bank of England.

On Monday, British finance minister Alistair Darling said he would beef up a national protection scheme to cover anybody's savings up to 35,000 pounds ($71,080) and in a speech at the Reuters HQ also said the increased limit was only the first step in improving the financial compensation scheme.