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Home>>Business >> World Business >> Europe
08:17, October 14, 2008

European countries announce ambitious bank rescue plans

European countries have been actively taking measures to help their banks stay afloat through the financial crisis, with some of them already announcing huge bank rescue plans.

After 15 European nations' leaders met in France to draft a coordinated plan in the face of the credit crunch, the British government announced Monday that it plans to invest up to 37 billion pounds (about 64 billion U.S. dollars) in three British banks to deal with the current financial crisis.

Britain's Prime Minister Gordon Brown speaks at the London offices of Thomson Reuters in Canary Wharf October 13, 2008. (Xinhua/Reuters Photo)

British banks Royal Bank of Scotland, HBOS and Lloyds TSB will participate in the government commercial investment, according to the Treasury.

The rescue plan made the British government the biggest shareholder in these banks. And the announcement was the first aspect of Britain's rescue package for banks, in which the government planned to inject 50 billion pounds (about 87 billion dollars) into financial institutions in return for shares, according to agencies.

Meanwhile, Germany is to inject 70 billion euros (about 95 billion dollars) into the banking system of the country this week as part of a rescue plan for the world's economic system, German news agency DPA reported Monday.

German Chancellor Angela Merkel addresses a news conference in Berlin, October 13, 2008. (Xinhua/Reuters Photo)

Germany's Finance Ministry would be authorized to use the funds to cover a liquidity injection for the banks and to take over tainted securities, DPA cited governmental sources as saying.

Up to 400 billion euros more (about 543 billion dollars) would be offered in government guarantees.

Germany will also set up a government fund that will inject money into the banks while accepting troubled assets from the banks as security.

At the same time, Spain is to allocate at most 100 billion euros (134 billion dollars) this year to guarantee the country's inter-bank loans, Prime Minister Jose Luis Rodriguez Zapatero said Monday.

But the Spanish government will not currently recapitalize its banks as agreed by other leaders from the eurozone, since Spanish banks have solvency, although the possibility for doing so remained, he said.

France's President Nicolas Sarkozy delivers a speech to announce a plan to tackle the financial crisis at the Elysee Palace in Paris, October 13, 2008. (Xinhua/Reuters Photo)

Also, the French government is to set aside up to 360 billion euros (490 billion dollars) to prevent its banks from falling prey to the current credit crisis, President Nicolas Sarkozy announced Monday.

The plan is composed of a maximum of 320 billion euros (435 billion dollars) for the country's inter-bank loans, and another 40 billion euros (55 billion dollars) at most for the recapitalization of French banks.

Meanwhile, Russian President Dmitry Medvedev Monday signed into law a package of measures to help the country's financial system survive the global financial turmoil.

The new laws allow the state-owned VEB bank to issue to the country's largest lending establishments foreign currency loans of up to 50 billion dollars until Dec. 31, 2009, to repay foreign loans taken before Sept. 25, 2008, RIA Novosti news agency said.

Russia will also raise deposit insurance coverage to 700,000 rubles (27,000 dollars) from 400,000 rubles (15,000 dollars) and to strengthen safeguards for depositors.

U.S. President George W. Bush (R), Italian Prime Minister Silvio Berlusconi (C) and first lady Laura Bush (L) wave from the balcony of the White House after an official arrival ceremony on the South Lawn of the White House in Washington, October 13, 2008. (Xinhua/Reuters Photo)

In the meantime, U.S. President George W. Bush and visiting Italian Prime Minister Silvio Berlusconi also vowed Monday to take action to rescue the global economy amid the world financial crisis, after seeing European countries' efforts.

Active measures and coordinated actions by the European countries infused excitement into the world's major stock markets.

The Dow Jones industrial average, which lost nearly 2,400 points over eight sessions, was up more than 400 points above 8,800.

The FTSE 100 index in the London stock market jumped about 5 percent Monday opening and more than 4 percent by midday.

Germany's stocks opened higher Monday on the Frankfurt Stock Exchange, with the DAX index of 30 big companies rising by 4.86 percent; the index of medium-sized firms, MDAX, up 7.87 percent and the TecDAX, 8.50 percent.


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