Voices in favor of nationalizing major UK banks to save them from a mauling in the markets strengthened Thursday, sending banks' share prices into a roller coaster of hope and dismay.
Barclays, which Wednesday had dropped to the lowest level in 24 years, was up 7 percent in the morning, but closed 10.4 percent lower.
Royal Bank of Scotland whose shares plunged 70 percent Monday after it announced the biggest loss in UK corporate history, jumped 20 percent in the morning but ended 2.4 percent lower.
Lloyds stock, which fell 13 percent Wednesday, started the session up 18 percent and closed 8.9 percent up, while HSBC rose 2.2 percent by the close.
British Treasury minister Paul Myners rejected the idea of bank nationalization, saying the government wanted to support a return to an effective banking sector, but analysts say a takeover by the state may be difficult to avoid.
"I think we're moving inevitably towards nationalizing the major banks and I think we should, not just because that's the way to recapitalize them but we also need a big culture shift and strategy shift in the way banks operate, and it's the best way to do it," author and economist John Kay told CNBC.
"Actually what we need to do is banks need to be boring, risk-adverse and a lot more bureaucratic than they have been in the past 10 years," Kay told "Squawk Box Europe."
Banks need to return to their "dull" old model of taking deposits, lending money and making the payment system operate, Kay added.