The faltering Dutch-Belgian bank and insurance giant Fortis has been partially nationalised.
European Central Bank President Jean Claude Trichet held emergency talks with Dutch and Belgian ministers – including Belgian Prime Minister Yves Leterme – to rescue the cross-border financial group.
Belgium, the Netherlands and Luxembourg have agreed to invest 11.2 billion euros in Fortis to avert insolvency and restore investor confidence.
Belgian Finance Minister Didier Reynders told a packed press conference: “It is important to say this is a Benelux agreement with three governments on board, who intervened directly to take control of three banks, situated in either Belgium, the Netherlands and Luxembourg. With a 49 per cent stake in the business it represents 11.2 billion euros.”
The presence of the ECB President at the talks underlined the serious concern for the integrity of the Eurozone’s financial system.
Fortis Chairman Maurice Lippens resigned after being accused of concealing the bank’s difficulties for too long.
In Britain the Spanish banking giant Santander is to buy up the retail deposits and branch network of troubled British mortgage bank Bradford and Bingley for around 500 million euros.
The British Government is shortly expected to announce plans to nationalise the company’s 51 billion euro mortgage business after failing to tempt rivals into buying it.
In Germany the Hypo mortgage bank has been bailed out by a consortium of private banks in a re-financing deal worth several billion euros.