We are trading through exceptionally times – another volatile week since the last article saw the FTSE 100 Index drop below 3874 on Friday and, as I write, we stand at 4264.

I would expect the FTSE to rally, maybe to 4700, and then to fall back again as we face the jaws of a global recession.

Last week the Bank of England announced an interest rate cut of 0.5 per cent.

We can expect more cuts, but borrowers should remember that these take time to take effect.

Of more concern is that London Interbank Overnight Rate has diverged from the base rate of 4.5 per cent so lending rates remain higher.

It was almost unthinkable that the big banks could be in need of help but we have now seen the Government pump £37bn of tax payers’ money into UK banks, with Royal Bank of Scotland taking the lion’s share. This means taxpayers could own 60 per cent of RBS and 40 per cent of a merged Lloyds and HBOS. Until the preference shares are repaid to the Government, Ordinary shareholders forego their dividend income.

Yes, banking stocks do look cheap, but we need more time to be sure the worst is over.

Has the Financial Services Authority done a “belt and braces” job and are the balance sheets going to be sufficiently secure for almost anything to be thrown at them? Recessionary effects have yet to hit their much weakened balance sheets.

HSBC is one banking giant that has held up remarkably well, seeing its share price fall by only 15 per cent in the last year compared to 90 per cent of RBS.

It has not had to access Government funds and has not had to resort to outside shareholders to raise capital.

Furthermore, HSBC has made it clear that it has no intention of seeking help from the government and has benefited from its focus on Asia and other regional markets.

This has ensured a deep pool of capital to draw on and proves that HSBC is well diversified and highlights its defensive qualities.

The bank is in a strong position and perfectly placed in the current market to get even stronger and if other banks start selling assets cheaply, it will be able to snap up what it wants.