THE fragile air of optimism in regional markets evaporated yesterday as investors took fright at the woes afflicting British lenders.

Bank shares across the Asia-Pacific region tumbled on fears that the Royal Bank of Scotland (RBS) might have to be nationalised by the British government after it posted US$40.5 billion (S$61.1 billion) in losses.

While RBS is a relatively unknown name in the region, it enjoys considerable banking clout because of its acquisition of Dutch lender ABN Amro, which has an association with Asia going back more than a century.

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