European banks in wave of bailouts

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LONDON, BRUSSELS & FRANKFURT – European Union banks are having a disastrous week. Bailouts and depositor protection schemes have hit the news in the UK, Ireland, Belgium, the Netherlands, France, Germany and Luxembourg. The string of emergency measures comes after many EU commentators spoke of the insulation European banks had against the US fallout. However, recent events have fuelled talk of EU measures similar to the stalled US $700 billion bailout plan.

The European Central Bank, German central bank and a consortium of German banks provided €50 billion ($72 billion) of liquidity loans to keep Germany’s largest lending bank, Hypo Real Estate, afloat. German finance minister Peer Steinbrück has described the initiative as “the biggest bank bailout in German history”.

Brussels-based bank Fortis has also received a €11.2 billion lifeline, from the governments of Belgium, Luxembourg and the Netherlands. French and Belgian governments also agreed to provide €3 billion in loans each to save municipal lender Dexia.

Ireland has moved to guarantee all bank deposits up to €100,000 – the cost of which has yet to be seen. In the UK, lending bank Bradford & Bingley (B&B) has been nationalised – the full cost of which is also as yet unknown.

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• Topics
• Bailout
• Dexia Bank
• European Central Bank (ECB)
• Fortis Bank
• Liquidity
• Regulation
• Foreign exchange
• Central banks
• Structured products
• Operational risk