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Among the big losers is Halifax-owners HBOS, Britain's largest mortgage lender, whose share prices fell by 10.75 per cent, hitting a record low of 207.5p, reported the Times.
Barclays also saw its share price fall 5.3 per cent to 299.25p. The bank admitted it was examining a possible purchase of some of the Lehman Brothers' assets.
In Asia, Japanese shares hit a three-year low when the country's stock exchange opened after a national holiday.
In a statement, the Bank of Japan said it "will closely watch development surrounding the latest US financial institutions and its impact, and will continue to take appropriate measures to maintain smooth settlement and stability in the financial market".
According to the Miami Herald, the crisis in Wall Street could have a far-reaching and long-lasting impact.
