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Royal Bank of Scotland (RBS) are due to announce full-year results and it is widely anticipated they will show the biggest corporate loss in the history of UK banking.
Stephen Hester, RBS' new chief executive, is also expected to reveal proposals to shrink the bank's balance sheet by up to 25 per cent over the next three to five years.
Matt Buckland, a dealer at CMC Markets, told the Financial Times: "Equity markets are in for something of a defining week, not least amongst the banks, where a series of government measures are expected to be announced [and] RBS will report those shocking full year results."
In other banking news, it was recently announced that the nationalised Northern Rock bank will boost mortgage lending.
