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World financial crisis

480 billion euro rescue for German banks

Article published on the 2008-10-13 Latest update 2008-10-13 12:18 TU

An investor looks at a screen in Hefei, Anhui province, China.
(Photo: Reuters)

An investor looks at a screen in Hefei, Anhui province, China.
(Photo: Reuters)

Banks and governments around the world are still reacting to the crisis after Sunday's meeting of eurozone leaders in Paris. The UK is pledging billions to rescue banks while Germany and Spain have announced their financial rescue packages, which include billions in inter-loan guarantees. France is expected to announce a 300 billion euro loan guarantee after a ministerial meeting Monday afternoon. Elsewhere in Europe, Hungary's currency has lost ten per cent, and Poland and the Czech republic have pushed back plans to join the eurozone. Here's a roundup of what is happening around the world.

Germany: Goverment sources say the Finance Minister Peer Steinbrueck is to release a 480 billion euro package on Monday to support its financial sector. Eighty billion euros will be used for fresh capital, while 400 billion euros will go to facilitate inter-bank loans.

France: President Nicolas Sarkozy will announce the French bank rescue plan at 3 PM local time (1300 UT) Monday after an emergency ministerial meeting. The daily Le Monde newspaper is reporting that the package will involve a 300 billion inter-bank loan guarantee, good until the end of 2009.

Spain: Prime Minister José Luis Rodriguez Zapatero announced Monday after an extraordinary ministerial meeting that the government will guarantee inter-bank loans up to 100 billion euros in 2008. He said Spain will not recapitalise its banks because its financial sector is still strong enough. "Today it is not necessary," he said.

UK: Chancellor of the Exchequer Alistair Darling has said the government is putting billions into three British banks (RBS, HBOS, Lloyds). Up to 47 billion euros can be used to take stakes of 60 per cent in RBS and 40 per cent in the two others. Barclays has turned down an offer of government help, saying it will raise 8.2 billion euros.

Prime Minister Gordon Brown said on Monday that the managers of the three banks who receive government help will not receive bonuses this year.

Outside the eurozone

Iceland: The stock exchange will reopen Tuesday, after closing two days last week. It has lost half its value since the start of the year.

Hungary: Prime Minister Ferenc Gyurcsany has welcomed an offer of support from the IMF and the EU after its national currency, the forint, lost ten per cent of its value last Thursday night.

Poland: The Governor of the Central Bank, Slawomir Skrzypek, has said the date of Poland's entry into the eurozone will have to be reevaluated because of the current crisis. A referendum had been envisaged for 2010. This comes after a similar announcement by the Czech Republic last week, whose National Bank governor Zdenek Tuma said the issue may be reopened next year.

Outside of Europe

India: Finance Minister Palaniappan Chidambaram said again on Monday that the country's economy was solid. Just over nine billion euros were injected into India's financial system last week.

Japan: Finance Minister Shoichi Nakagawa said on Monday that he's considering a guarantee on all bank deposits, if he deems it necessary. The stock market is closed for a holiday.