Shares in British banks were down on the FTSE 100 in morning trading following a report in the Wall Street Journal, which suggested that recent "stress tests" of European banks were not vigorous enough.

The WSJ claimed that the tests had undermined the exposure of some of the larger banks to sovereign debt. At the time the tests were seen as a success for Europe's banks, all but a handful passed and none of those that failed were publicly listed or British.

However the report seems to have deterred investors from banking shares this morning, despite the news that Barclays would be appointing its top investment banker, Bob Diamond, as its new CEO next year.

In other news the BBC has reported that the chairman of HSBC, Stephen Green, is to leave his post to become a trade minister for the Coalition government.

By 11:00 shares in Lloyds Banking Group were down 1.67 per cent to 71.66 pence per share, RBS shares declined 1.38 per cent to 46.30 pence per share, Barclays shares fell 3.39 per cent to 311.90 pence per share and HSBC shares dropped 0.36 per cent to 660.40 pence per share.

Overall the FTSE 100 was down 0.85 per cent to 5,393.11.