The continuing deterioration in the health of the US banking system was highlighted yesterday when a leading regulator said the number of troubled institutions climbed by 30 per cent during the second quarter.

The Federal Deposit Insurance Corporation said the number of banks on its "problem list" had grown from 90 institutions at the end of the first quarter to 117 at the end of June - the highest figure since early 2003. The combined assets of struggling banks increased dramatically in the three months from $26bn (€17.8bn, £14.1bn) to $78bn.