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World Financial Crisis

Wells Fargo buys out Wachovia ahead of Congress bailout vote

Article published on the 2008-10-03 Latest update 2008-12-12 14:49 TU

After some changes the financial bailout plan comes back before the US House of Representatives on Friday. Ahead of the vote Wells Fargo bank bought up a competitor while the UK government raised its guarantee on deposits to 64,000 euros.

On Friday the US House of Representatives will vote on the government package that it initially rejected at the start of the week. The bill comes back to the House after some modifications and a successful passage through the Senate. The House will begin debating at 15.00 UT.

The head of the European Central Bank, Jean-Claude Trichet, said the deal was necessary but could not say if it would be sufficient to stem the current financial crisis. The ECB said on Friday that it would allocate 36 billion euros for the eurozone banking sector.

There was more news from financial institutions ahead of the vote. The US bank Wells Fargo announced on Friday that it was buying a rival bank, Wachovia, for just almost 1 billion euros. The insurance group AIG said it would sell off assets to raise money needed to pay back a 44 billion euro loan from the Federal Reserve.

In the UK, the Financial Services Authority announced that it would guaranteed bank deposits up to 64,000 euros. This represents a 43 per cent increase on the previous goverment-guaranteed figure and will come into effect next Tuesday.

In European markets share prices held steady on Friday morning, while in Russia parliament adopted a series of measures worth 36 billion euros to support financial markets. Russia's Central Bank also agreed to extend loans to the major Russian banks. Later in the day however trading had to be suspended for an hour on the country's stock market when some shares fell by five percent.

In Asia Japanese share prices closed down 1.94 per cent at a three-year low. Trading was closed in Seoul for a public holiday but in Sydney the market was down 1.4 per cent at close of trading and down almost three per cent in Hong Kong. 

Ahead of Saturday's meeting of European economic powerhouses, France, Germany, Italy and the UK, South Korea's President Lee Myung-Bak suggested a conference of finance ministers from China, Japan and South Korea to discuss the current crisis.