'Bank bailouts sweep Europe
European governments, including Belgium, Netherlands, Luxembourg and Britain, intervene to prop up weakened banks as crisis deepens.
September 29, 2008: 11:13 AM ET
LONDON (AP) -- European governments had to step in with a flurry of major bank bailouts from Iceland to Germany as fear and turmoil from the U.S.
credit crisis spread through the financial system.
Even as U.S. lawmakers were preparing to vote on a massive $700 billion (€490 billion) rescue of their own banks, the governments of Belgium, the Netherlands and Luxembourg took partial control late Sunday of struggling bank Fortis NV (FORSY), while Britain seized control of mortgage lender Bradford & Bingley (BDBYF) early Monday.
German credit lifeline
Germany organized a credit lifeline for blue-chip commercial real estate lender Hypo Real Estate Holding AG, while Iceland's government took over Glitnir bank, the country's third largest.
The rapid-fire European bailouts were quickly followed by news that U.S.
financial giant Citigroup Inc (C, Fortune 500). was acquiring the banking operations of troubled Wachovia Corp., (WB, Fortune 500) the latest U.S.
financial institution to fail or be sold. Citigroup will absorb losses of up to $42 billion in a government-facilitated takeover.
European shares fell heavily and money markets remained frozen, with banks refusing to lend to each other for all but the shortest periods.
"All banks are having difficulty with long-term loans and short-term financing. It's difficult to say which could be affected," said UniCredit economist Alexander Koch in Munich.
"Despite the rescue packages in the U.S. (and Europe), that doesn't fully correct the problem. I see the problem flowing until late next year," he added.
Fortis shares fall
Shares in Fortis, Belgium's largest retail bank, continued to fall Monday after Belgium, the Netherlands and Luxembourg agreed to an €11.2 billion
($16.4 billion) bailout package late Sunday to avert a run on the bank. The three governments took a 49% stake in exchange and demanded Fortis sell the stake it had bought in ABN Amro a year ago for €24 billion - a move that many analysts believe started its troubles.
The bailout was meant to restore confidence in the bank before the reopening of markets on Monday after a tumultuous week of imploding share values at Fortis.
There was little likelihood of that, however, amid news of other European rescue packages and investor skepticism about the effectiveness of a tentative deal in Washington on a plan to buy banks' bad assets and stabilize the financial system.'
Geen opmerkingen:
Een reactie posten