Short-selling in UK bank stocks should be banned by the City watchdog to stop “aggressive” speculators from “betting against the taxpayer”, Vince Cable, the Liberal Democrat deputy leader, said at the party conference on Tuesday.

As shares in HBOS, the UK’s biggest listed mortgage lender, plunged on concerns over its capital position, Mr Cable called on the Financial Services Authority to intervene against short-sellers, who profit when shares drop.