Europe Has to Save Some Banks, Too

The US banking problem isn’t unique. The Europeans have had to step in to save various of their banks as well. Banks in Iceland, Britain and the Lowlands have either been nationalized or otherwise fixed up in the last couple of days. There could well be more to come.

In Britain where Northern Rock had already been nationalized, mortgage-oriented Bradford and Bingley will join un coming under the government’s wing. The BBC says, “Under the nationalisation of B&B, the government will take control of the bank's £50bn mortgages and loans, while B&B's £20bn savings unit and branches will be bought by Abbey and its Spanish parent group Santander. All B&B savings accounts are protected, and taxpayers are being shielded from any losses thanks to the Financial Services Compensation Scheme.”

In Iceland, the Beeb notes “The Icelandic government has taken control of the country's third-largest bank, Glitnir, after the company faced short-term funding problems. The government has bought a 75% stake in the bank for 600m euros ($860m; £478m) to ensure stability of the bank during the current financial turmoil. Glitnir is expected to operate as normal and the government said it did not intend to hold the stake for long. It is the first Icelandic banking nationalisation of the current crisis.”

On Sunday, Fortis was partly nationalized “by the Netherlands, Belgium and Luxembourg. Ministers from the three countries agreed to put 11.2bn euros ($16.1bn; £8.9bn) into Fortis to save the bank. Analysts say the bank's biggest mistake was joining in - along with Britain's Royal Bank of Scotland and Spain's Santander - in the 70bn euro purchase of the Dutch bank ABN Amro last year,” the Beeb also says. Yesterday, Dexia was saved after all-night talks among the Belgian, French and Luxembourg governments, which agreed to put in 6.4 billion euros ($9 billion; £5 billion) to keep the bank afloat.

In Ireland, no bank has had to receive help, but the government did act to guarantee all deposits for the next two years. The BBC also says, “Allied Irish, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society. The Irish Department of Finance said all deposits, bonds and debts in the six banks and building societies would be covered by the state for the next two years.”

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

Kensington Review Home