European stockmarkets plummeted on Monday again despite the European Central Bank matching its Asian counterparts by injecting more cash into paralysed money markets. But commercial banks have still preferred to keep their hands on cash rather than lend to each other as the financial crisis spreads across Europe.
The lack of trust has now taken its toll on Dexia. Shares in the Franco-Belgian investment firm dived amid reports it was planning a capital increase. However, a string of bank nationalisations in Europe suggests the global credit crisis is far from over.
The Benelux financial group, Fortis, has been forced to accept an 11 billion euro bail-out to prevent going under. Ironically its current position was reversed a year ago, when it was able to buy out the struggling Dutch bank, ABN Amro.
In Britain, the government has taken over mortgage lender, Bradford and Bingley and sold its branches and deposits to Spanish bank, Santander. But there has been slightly better news for the German mortgage lender, Hypo Real Estate. It struck a last-minute deal with a group of banks for credit to resolve a refinancing squeeze.