Europeans scramble to save failing banks

The Associated Press ~ staff The News
Send to a friend

Send this article to a friend.

Economy

Germany became the newest European country to allay fears about the financial meltdown, guaranteeing private bank accounts as governments scrambled on their own to save failing banks.

Chancellor Angela Merkel said that no citizen should fear for the safety of their investments, speaking to reporters as her government held crisis talks on the collapse of a ballyhooed US$48-billion bailout of Hypo Real Estate AG, the country's second-biggest property lender.

Stockholm, Sweden - Germany became the newest European country to allay fears about the financial meltdown, guaranteeing private bank accounts as governments scrambled on their own to save failing banks.

Chancellor Angela Merkel said that no citizen should fear for the safety of their investments, speaking to reporters as her government held crisis talks on the collapse of a ballyhooed US$48-billion bailout of Hypo Real Estate AG, the country's second-biggest property lender.

German Finance Ministry spokesman Torsten Albig said the unlimited guarantee covered some $785 billion in savings and chequing accounts as well as time deposits, or CDs.

In Iceland - particularly hard-hit by the credit crunch - government officials and banking chiefs were discussing a possible rescue plan for the country's overstretched commercial banks.

Belgian Prime Minister Yves Leterme said he aims to find a new owner for troubled bank Fortis NV to restore confidence in the company before the opening of markets on Monday.

Leterme told two media outlets that government officials were going over a takeover bid for Fortis' Belgian operations. The bank's Dutch operations were nationalized amid fears they could go insolvent.

British treasury chief Alistair Darling said that he was ready to take "pretty big steps that we wouldn't take in ordinary times" to help the country weather the credit crunch.

In the past year the government has nationalized struggling mortgage lenders Northern Rock and Bradford & Bingley.

"The European banking industry is feeling the wind of default blowing from the other side of the Atlantic," said Axel Pierron, senior vice-president at Celent, a Boston, Massachusetts-based financial research and consulting firm.

The erosion has also injured overall confidence and caused concern among investors, politicians and the European public.

The leaders of Germany, France, Britain and Italy met Saturday to discuss the meltdown that has leapfrogged across the Atlantic from the United States to Europe, but shied away from action on the scale of the massive $700 billion bailout passed by the U.S. Congress on Friday and later signed into law by U.S. President George W. Bush.

Their failure to agree to an EU-wide plan showcased the divisions in Europe on how to deal with the crisis.

France had suggested a multibillion-euro EU-wide government bailout plan, but backed off after Germany said banks must find their own way out.

French President Nicolas Sarkozy's top adviser, Claude Gueant, insisted that a "common European plan" had come out of the summit.

"What is certain and what the citizens of France and Europe must know is that their (banking) establishments won't be left in difficulty," he told Europe-1 radio on Sunday.

Organizations: Fortis NV, Hypo Real Estate, Finance Ministry EU Northern Rock and Bradford & Bingley U.S. Congress

Geographic location: Germany, United States, Stockholm Sweden Europe France Iceland Atlantic Britain Italy

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments