What Lehman Brothers' collapse means for UK Investors

Graham Spooner, Investment Adviser at The Share Centre comments on the knock-on effect for the UK banking sector, as US investment bank, Lehman Brothers files for bankruptcy.

"Before we even had time to speculate whether the markets and banking sector were beginning to turn the corner, the financial markets are hit by another financial blow as more than 25,000 Lehman Brothers employees now face unemployment. This certainly isn't going to help investor confidence, the banks continuing reluctance to lend to each other, or applications for that increasingly difficult to secure mortgage.

Earlier today Barclays, Lloyds TSB and Royal Bank of Scotland all saw their share prices drop considerably. So far the biggest loser has been HBOS which has fallen more than 24%.

Investors holding UK banking shares have had a torrid time of late and there's still no sign of any immediate improvement. Those considering buying into the weakness at present should probably remain on the sidelines until the picture is a little clearer. While there are no safe havens in the banking sector at present, more adventurous investors looking to take advantage of the volatile markets and the weakness in the banking sector could do worse than HSBC, which is considered less risky than most due to its international brand".