Investors in Barclays PLC (NYSE: BCS) (London: BARC) lost over £4 billion ($6.2 billion) Thursday as the British bank lost one-sixth of its market capitalization a day after international regulators announced it would have to pay hundreds of millions as a fine for an audacious price-fixing fraud some of its traders were found to have engaged in.

The financial malfeasance was related to Barclays' daily contributions to a highly-influential poll of interest-rate conditions, known as the London Interbank Offered Rate, or LIBOR. Regulators found Barclays traders were influencing the company executives in charge of responding to the poll in order to game the system to their advantage.

Barclays pledged to pay $200 million to the U.S. Commodities and Futures Trading Commission, $160 million to the Justice Department and £59.5 million to the UK's FSA. The fines were the largest in the history of the CFTC and FSA.

Even though the fine was announced Wednesday morning, shareholders were truly hit Thursday, as a parade of politicians in the United Kingdom highlighted the issue and legal experts began speculating what the cost of coming litigation related to the fraud would be in the billions of pounds.

UK Chancellor of the Exchequer George Osborne asked for the bank to be investigated under criminal statutes, and Prime Minister David Cameron criticized Barclays Chief Executive Robert Diamond.

It was really the threat of lawsuits, however, that spooked the markets.

“We expect that the cost of lawsuits related to Libor manipulation will dwarf the fines imposed on Barclays,” said Sandy Chen, a banks analyst at Cenkos Securities PLC in London, who is “penciling in multi-year provisions that could run into the billions.”

In London, shares of Barclays PLC were trading at £162.90, down £33.15 or 16.91 percent, with a few minutes to go in the trading session. The Royal Bank of Scotland, which is also being investigated by regulators for similar accusations but has not been fined, was down 12.14 percent, or £28.30, to £204.80. Lloyds Banking Group PLC, a third British bank being investigated, was down a more moderate 6.21 percent, off by £1.93 to £29.22.

In New York, JPMorgan Chase and Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) led large banks down, off by 3.7 percent and 2.47 percent respectively.