Shares in British banks took a dive on the FTSE 100 in morning trading a day after the Libor rate fixing scandal involving Barclays broke.

Barclays has agreed to pay penalty of £59.5 million to the Financial Services Authority and $360 million to authorities in the US following an investigation into alleged manipulation of the Libor and Euribor markets.

In addition to this Barclays may still face fines from regulators in other nations such as Japan and Switzerland. Barclays CEO Bob Diamond has already said that he will be forgoing his bonus this year.

However Barclays is not the only bank in the spotlight. It has also been reported that Lloyds Banking Group, RBS and HSBC are also being investigated by regulators, as well as foreign banks Citigroup, Deutsche Bank, ICAP and UBS.

Shares in British banks were down across the board on the FTSE 100, with Barclays dropping the most.

By 11:50 shares in Barclays were down 9.44 per cent to 177.55 pence per share, RBS shares dropped 6.74 per cent to 217.40 pence per share, Lloyds Banking Group shares declined 5.76 per cent to 29.36 pence per share, HSBC shares fell 2.69 per cent to 557.60 pence per share and Standard Chartered shares were down 1.78 per cent to 1,350.50 pence per share.

Overall the FTSE 100 was down 0.99 per cent to 5,469.35.