The US Senate yesterday voted to release the second $350bn in emergency bail-out funds for the banking sector as Bank of America moved closer to securing a new rescue package, including $15bn in fresh capital and a government backstop for up to $200bn in toxic assets.

The 52-42 Senate vote to approve the second half of funds from the Troubled Asset Relief Programme came after a day of market turbulence on both sides of the Atlantic. BofA shares fell 18 per cent and Citigroup dropped 15 per cent on fears that they would need greater government support.