Shares in UK bank HBOS led a decline in banking stocks as turmoil on the financial markets triggered by the collapse of Lehman Brothers continued.
Investors are concerned that HBOS is too dependent on money markets to fund its lending as the cost of borrowing shoots up.
Shares in HBOS closed down 21.7%, or 50.5 pence at 182p. Earlier in the day the shares were down 34%.
In a statement, HBOS said it had a "strong capital base".
Ratings agency Standard & Poor's lowered its credit rating on HBOS. It said the bank's credit risk was higher than some of its rivals because high loan-to-value and specialist mortgages made up a "sizeable" part of its mortgage book.
S&P also said that the ratio of loans to customer deposits at HBOS was higher than many of its similarly rated peers, making it more vulnerable to rises in borrowing costs on the money markets.
HBOS, the biggest UK mortgage lender, was the biggest decliner in the FTSE 100 index.
Not far behind was Royal Bank of Scotland, whose shares ended down 10.2% at 189.1p. Barclays fared better, its shares closed down 2.53% at 308p.
The interest rates at which banks lend to each have risen sharply since Lehman's dramatic collapse over the weekend, suggesting that banks are losing confidence in each other.
Overnight sterling Libor increased from 5.5% to 6.8%, and the dollar Libor rate increased from 3.1% to 6.4%.
HBOS said on Monday that the group had the strongest capital ratio of all the major UK domestic banks.
"As we reported at the interim results, we are comfortable with our funding profile. We have access to a diverse range of funding sources and that hasn't changed," it added.
HBOS was created in September 2001 following the merger of the Halifax and Bank of Scotland.