RBS, the owner of NatWest, saw shares fall 4%, down 9.1p to 227.7p, with some in the City estimating the recent IT meltdown could cost the bank tens of millions of pounds.
The wider Footsie lost early session gains to close down 3.7 points at 5447 amid doubts that a European summit will get to grips with the debt crisis.
Investors reacted with scepticism to reports that leaders will agree to give the EU greater fiscal control over the 17 nations of the eurozone to help stop borrowing spiralling out of control.
America's Dow Jones Industrial Average struggled to gain ground after reports that German Chancellor Angela Merkel was opposed to a shared debt liability – which offset brief cheer over better-than-expected house price data in the US.
There was also more economic gloom in the UK, with grim official figures revealing government borrowing surged by £17.9 billion in May, up from £15.2bn the previous year.
Bank of England boss Sir Mervyn King added to the economic disappointment as he told MPs the financial crisis was not even half-way through and said he was "pessimistic" for the chances of a eurozone recovery.
Sterling rose against the euro and dollar despite the headwinds and signs of more Quantitative Easing (QE).
Sir Mervyn and fellow rate setters signalled in their meeting with MPs that more QE was on the horizon, yet this has already been factored in to currency markets.
Among stocks, RBS was in sharp focus as Sir Mervyn said there needed to be a "detailed investigation" of what went wrong at the bank and why it took so long to resolve.
Lloyds Banking Group fell 0.3p at 30.1p.
BSkyB shot close to the top of the risers board after News Corp said it was considering separating its broadcast and print businesses.
The news triggered speculation a renewed bid for the broadcaster was now more likely. Shares rose 3% or 18p to 674p.
In the FTSE 250, Stagecoach saw shares rise 5% despite posting a drop in underlying profits to £202.5 million, compared with £205.7 million a year earlier, after seeing revenues growth at its rail division slip behind schedule. Shares were up 13.7p at 263.5p.
Contextual targeting label: