Governments rescue Fortis but bank woes spread
Three governments nationalized banking and insurance group Fortis in a bid to avert U.S.-style financial contagion, but the European sector’s troubles appeared to be spreading on Monday.
The Belgian-Dutch company’s stock rose when markets reopened after a weekend of high drama, but the gains were wiped out in hectic trading as bank shares across Europe fell despite agreement in the United States on a $700 billion rescue plan.
Shares in Fortis rival Dexia plunged 20 percent after a newspaper report it planned a capital increase. German property lender Hypo Real Estate plummeted 61.5 percent after it secured an emergency credit line from a consortium of banks and a substantial government guarantee.
In Britain, mortgage lender Bradford & Bingley became the second British bank to be nationalized since the global credit crunch began last year.
After emergency talks with European Central Bank President Jean-Claude Trichet on Sunday, the Belgian, Dutch and Luxembourg governments agreed to inject 11.2 billion euros ($16.4 billion) into Fortis in the first major bank crisis to hit the euro zone in 13 months of global turmoil that began in the United States.
“One can call it nationalization, in another kind of way,” Belgian Finance Minister Didier Reynders told RTBF radio.
Fortis will sell the parts of Dutch bank ABN AMRO it bought last year to Dutch rival ING in a deal expected to be finalized within two weeks, sources familiar with discussions told Reuters faxless payday advances. ING declined comment.
“Integrating ABN AMRO was a step too far for this company to do,” new Fortis CEO Filip Dierckx told a conference call.
Filed under: business by Wolf