Royal Bank of Scotland Next?

Think about the challenges facing RBS. First it's STILL in the middle of the ABN merger. With Fortis (a member of the consortium) being bailed out, there will be complications, further delays and more problems.

Secondly, UK banks are not doing so well. The UK had a very inflated mortgage market, with many "buy-to-let" mortgages not performing. HBOS has seen its stock drop precipitously until the Lloyds merger. Bradford & Bingley & Northern Rock illustrate the problems in the mortgage market.

RBS is also exposed in the leveraged loan market. They're huge in the market. That was a great thing, now investors need to evaluate the loan portfolio and assess what it really is worth.

Interbank funding pressures and strains are also a concern. LIBOR has continued to rise, 3 month LIBOR is at 3.88% despite fed funds target being 2.00%. The lack of liquidity in the interbank market will certainly affect the amount of lending and the revenues of RBS.

32% is a lot to lose in a day. But hopefully these are some reasons to why the stock has fallen.