BRUSSELS, Oct.15 (Xinhua) -- Annual inflation in the 15-nation eurozone dropped for the second month in September, official data released here Wednesday showed.
Annual inflation was down to 3.6 percent in September from August's 3.8 percent, the Statistical Office of the European Communities, or Eurostat, said. The decline conformed with the office's previous forecast.
But the rate is still higher than the European Central Bank's comfort zone of lower than 2 percent. A year earlier, the rate was2.1 percent.
Monthly inflation in the zone was 0.2 percent in September, said the office.
As oil prices went down, annual inflation in the eurozone has steadily fallen from a record high of 4 percent in July.
The annual inflation in the 27-nation European Union (EU) fell by 0.1 percentage points to 4.2 percent compared with the figure in August. The rate was 2.2 percent a year earlier.
Monthly inflation in the EU stood at 0.3 percent in September.
Eurozone annual inflation down in September
Financial crash could deepen food crisis: FAO Director-General
ROME, Oct. 15 (Xinhua) -- Governments should not cut aid to agriculture in developing countries and avoid bringing in protectionist trade measures in response to the unfolding global financial crisis, FAO Director-General Jacques Diouf warned Wednesday.
In a speech at the 34th Session of FAO's Committee on World Food Security (CFS) from Oct. 14-17, Diouf warned that such steps could increase the risk of another food crisis occurring next year,saying that it could happen despite the record 2008 cereal harvestwhich is now expected.
According to the latest issue of FAO's Crop Prospects and Food Situation report, cereal production is forecast to increase 4.9 percent to a record 2. 23 billion tons in 2008.
Meanwhile, some 36 countries around the world are still in needof external assistance as a result of crop failures, conflict or insecurity, or continuing local high prices, the report noted.
The great uncertainty now enveloping international markets and the threat of global recession may tempt countries toward protectionism and toward reassessing their commitments to international development aid, Diouf said.
"It would be unfortunate if this were to be the case and the recently mobilized political will towards enhanced international support for developing country agriculture were to evaporate," he added.
Diouf noted that the financial crisis, following hard on the heels of the soaring food price crisis which threw an additional 75 million people into hunger and poverty in 2007 alone, may well deepen the plight of the poor in developing countries.
Commodity prices are currently dropping, mainly on expectation of favourable crop prospects but also because of a slowing world economy, among other factors.
This could mean a cutback in planting followed by reduced harvests in major exporting countries. Given continuing low grainsstocks, this scenario could lead to another turn of record food prices next year -- a catastrophe for millions who by then would be left with little money and no credit.
The impact of the financial crisis may also be felt in developing countries at the macro level, with further potentially negative effects on agriculture and food security, Diouf said.
"Borrowing, bank lending, official development aid, foreign direct investment and workers' remittances, -- all may be compromised by a deepening financial crisis," he noted.
Diouf recalled that governments and world leaders agreed at an FAO High-Level Conference on World Food Security held last June that "the international community needs to take urgent and coordinated action to combat the negative impacts of soaring food prices on the world's most vulnerable countries and populations."
A G8 Summit in Japan a month later confirmed the resolve of world leaders to address global food security as a top priority and demonstrated a growing political will to reverse disturbing trends in global hunger, he noted.
"It is vital that this momentum be maintained," Diouf said. "Unless political will and donor pledges are turned into real and immediate action, millions more may fall into deeper poverty and chronic hunger."
"The global financial crisis should not make us forget the foodcrisis. Agriculture needs urgent and sustained attention too to make hunger and rural poverty part of history," he added.
Merkel: global economy faces severe test since 1920s
BERLIN, Oct. 15 (Xinhua) -- The global economy is facing the most severe test since the big crisis in the 1920s, German Chancellor Angela Merkel said here on Wednesday.
Merkel made the warning when she spoke to the German parliamentwhen explaining her government's measures tackling the global financial crisis.
Merkel said the banking industries in the Europe's biggest economy was virtually inoperative during the past weeks and the stock market saw fateful price spiral.
"Therefore, the government must respond," she said.
Earlier on Monday, Merkel announced a huge financial rescue plan worth of some 500 billion euros (about 685 billion U.S. dollars), amounting to about 20 percent of Germany's gross domestic product.
The plan has been tabled to the German parliament for review and vote.
Speaking to the German parliament, Merkel said the German economy is also facing its most serious challenge since the big crisis in the 1920s.
She noted that her government's financial rescue package was aimed at tackling the challenge, which would convince the people that there will be no lasting economic slump in the economic engine of the European Union (EU).
Merkel also said the German companies are now crisis-proof.
Later on the day, Merkel will fly to Brussels for an EU summit aimed at dealing with the financial crisis.
Merkel told the parliamentarians that the EU level short-term adjustment of the European accounting rules to U.S. Standards could be decided soon, thus making the European banks more flexible rules in the financial statements for the third quarter use.
Merkel said further step should be taken to amend the international rules governing the financial markets, like increasing more transparency in the rating agencies and financial products.
Moreover, the role of the International Monetary Fund (IMF) should also be strengthened.
Merkel announced that the German federal government had invited a group of experts to elaborate and review the proposals for new rules on financial markets.
Earlier on Tuesday, German Finance Minister Peer Steinbrueck said the governing members of banks and financial institutions should have their annual income capped below 500,000 euros (about 685,000 dollars).
Merkel urged the banking industry to engage constructively and be self-critical in the reform work.
Merkel said the government's financial rescue plan is a rare case, which was aimed to "build trust" in the financial market, to "protect the citizens but not to protect bank interests."
EU approves Britain's bank bailout package
BRUSSELS, Oct. 14 (Xinhua) -- The European Union (EU) gave green light on Tuesday to British package to bail out its struggling banks and stabilize the financial markets.
The package, worth half 1 trillion pounds (about 880 billion U.S. dollars), will provide new capital to eligible banks and building societies, guarantee short and medium term debt to encourage inter-bank lending and offer liquidity to banks under strict conditions.
The European Commission, the EU's antitrust watchdog, found the measures to be compatible with EU state aid rules, because they were an appropriate means to remedy a serious disturbance in the British economy while avoiding unnecessary distortions of competition.
"The package provides for non-discriminatory access, is limited in time and scope and contains safeguards to avoid the abuse of the scheme," the commission said in a statement.
In a bid to ease the credit crunch amid the financial crisis, the British government announced the ambitious package last week, which would use 50 billion pounds to partly nationalize major banks, make available 200 billion pounds in short-term loans and guarantee a further 250 billion pounds of bank loans.
Chronology of financial turmoil in European Union
BRUSSELS, Oct. 14 (Xinhua) -- The financial turmoil spreading in the European Union (EU) is expected to dominate the two-day EU summit, which opens on Wednesday in Brussels.
The following is a chronology of major events in the financial turmoil in the EU:
Sept. 29 -- Britain announces plan of nationalization of mortgage lender Bradford & Bingley Plc. Banking.
Sept. 29 -- Dutch-Belgian banking and insurance group Fortis ispulled back from the verge of bankruptcy as the governments of Belgium, the Netherlands and Luxembourg agree to invest a total of11.2 billion euros (some 7.79 billion U.S. dollars) in return for a minority stake in the group.
Sept. 30 -- British Prime Minister Gordon Brown says his government will do " whatever it takes "to protect people's savings in the face of the ongoing global financial crisis."
Oct. 1 -- Belgium, France and Luxembourg rush to provide nearly 6.4 billion euros to save Franco-Belgian bank Dexia, the latest victim of the global credit crunch in Europe.
Oct. 1 -- The European Commission President Jose Manuel Barroso calls for a joint response from the EU member states to the current financial crisis.
Oct. 2 -- Irish parliamentarians vote to enact radical legislation guaranteeing Irish bank deposits and debts up to a total of 400 billion euros.
Oct. 3 -- The Dutch government says it has bought all the Dutch operations of Belgian-Dutch banking and insurance group Fortis for16.8 billion euros.
Oct. 4 -- Leaders from the EU's four largest economies -- Germany, Britain, France and Italy -- vow to work in a coordinated way in tackling financial crisis.
Oct. 5 -- Germany pledges to guarantee private deposits, which the government says is a "political" step to restore public confidence toward the banking system.
Oct. 6 -- The troubled banking and insurance group Fortis confirms that French banking giant BNP Paribas will buy all of Fortis' insurance operations in Belgium and a 75-percent stake in Fortis' banking activities in Belgium.
Oct. 8 -- The British government announces a 50-billion-pound bailout scheme for the financial system to help its biggest retail banks survive.
Oct. 9 -- The governments of Belgium, France and Luxembourg will guarantee all new borrowings and bond financings of the troubled lender Dexia until November next year, according to the bank.
Oct. 11 -- French President Nicolas Sarkozy and German Chancellor Angela Merkel call for joint actions from Europe or even the world to fight the ongoing critical financial crisis.
Oct. 12 -- Leaders from the eurozone countries hammer out an action plan in a joint response to the unfolding financial crisis at their first ever summit in Paris.
Oct. 12 -- The Norwegian government and the country's central bank announce that they would issue up to 350 billion kroner (about 57.41 billion U.S. dollars) in new government bonds which can be used as collateral in Norwegian banks' funding operations, to boost confidence in the financial market in the country.
Oct. 13 -- The British government announces a plan to invest up to 37 billion pounds (about 64 billion U.S. dollars) in three British banks -- Royal Bank of Scotland, HBOS and Lloyds TSB – to deal with the current financial crisis.
Oct. 13 -- Germany is to inject 70 billion euros into the banking system of the country this week as part of a rescue plan for the world economic system, according to German news agency DPA.
Oct. 13 -- The Netherlands will provide state guarantee to inter-bank loans of up to 200 billion euros in a bid to increase market liquidity by restarting capital flows among banks, Dutch Prime Minister Jan Peter Balkenende says.
Netherlands guarantees 100,000 euros for savers with Icelandic bank Icesave
BRUSSELS, Oct. 10 (Xinhua) -- The Dutch government has pledged to compensate up to 100,000 euros (about 136,000 U.S. dollars) to Dutch savers who have deposits at the troubled Icelandic Internet bank Icesave.
While making the promise on Thursday night, Dutch Finance Minister Wouter Bos also stressed that the government will not hesitate to take legal actions against Icesave if it is found to have been dishonest while doing business in the Netherlands, Dutchpaper De Volkskrant reported Friday.
The Dutch central bank, who is the executor of the Dutch deposit guarantee scheme, will assist savers with the submission of their claims, the finance ministry said in a press release on its website.
According to the release, a Dutch delegation is on its way to Iceland to discuss an arrangement of the reimbursements with Icelandic authorities.
The guarantee systems of Iceland and the Netherlands provide that the Icelandic authorities should ensure compensation for the first 20,887 euros of each saver and the Dutch authorities and banks are responsible for the rest of the 100,000 euros, the ministry said in the release.
However, Icelandic Prime Minister Geir Haarde has called on the Hague to guarantee all Dutch savings with the bank. About 120,000 Dutch customers have a combined 1.7 billion euros deposited with the bank, which was launched in the Netherlands in May this year.
The Netherlands obviously lacks enthusiasm about the idea. Bos reiterated on Thursday: "Something has to be done before the (Dutch) taxpayer pays for the collapse of an Icelandic bank."
Bos also threatened to take legal actions. He told the Dutch parliament on Thursday that he will try to find out whether Icesave has adequately informed the Dutch regulator when it applied for a license from the Dutch central bank.
All accounts at Icesave were frozen at the beginning of the week when Icesave's parent company Landsbanki was put under government protection after getting into financial difficulties
Netherlands provides 20 bln euros for financial sector
BRUSSELS, Oct. 10 (Xinhua) -- The Dutch government has made 20 billion euros (about 27.2 billion U.S. dollars) available for the financial sector to restore confidence between financial institutions.
The Dutch Finance Ministry and the central bank took the joint measures to protect companies that are "fundamentally healthy and viable" against the shocks of the current financial turmoil, the Dutch Finance Ministry said in a press release on its website.
The capital injection by the government can take various forms, including exchange for the companies' shares. The emergency measures should cause minimum disruption of market competition and the financial risks for the government should be limited, the ministry said.
The central banks of the euro zone countries and the European Central Bank have already taken measures to boost confidence in the financial sector. The Dutch central bank is ready to grant credit to financial companies to help with their short-term financing, the ministry said.
"These measures will contribute to a solid base for financial companies and strengthen confidence in the Dutch financial system and the stability of the international financial system," the press release said.
Announcing the measures late Wednesday night, Dutch Finance Minister Wouter Bos said money circulation in the Dutch market has been largely stalled because banks no longer trust each other. "The old Dutch saying is true: money should roll," Bos was quoted by Dutch media as saying.
The emergency measure is valid for a year. Banks and insurers that want to use the scheme must meet conditions.
Dutch central bank governor Nout Wellink said the 20 billion euros is not a fixed amount. The final amount will depend on the number of banks and insurers that resort to the scheme.
The Association of Dutch insurers has welcomed the government's move, calling it a "proactive approach". It said the crisis in the financial world justifies such intervention.
Britain in recession: survey
LONDON, Oct. 7 (Xinhua) -- A survey of 5,000 firms by British Chambers of Commerce (BCC) released on Tuesday gave an "exceptionally bad" result signaling that Britain is already in recession.
The BCC Quarterly Economic Survey Q3 2008 received over 5,000 responses from businesses of all sizes and sectors.
The 2008 Q3 results are "exceptionally bad," followed by worrying results in the second quarter -- virtually all the key national balances have worsened, and many are in negative territory, the report said.
The result, which is interpreted recession for the country by Sky News, showed that the domestic economy is under immense pressure for the second quarter in a row.
Key results from the survey indicate that domestic balances, sales as well as orders, have moved deeper into negative territory, for both manufacturing and services.
Confidence across sectors also collapsed with all confidence balances, turnover as well as profitability, falling to record lows for both manufacturing and services, it said.
Cashflow balances remain negative in this quarter, while recruitment dip across sectors.
Investment balances in plant and machinery moved into negative territory for both sectors, according to the report.
Nevertheless, the BCC believes that if the government and the MPC (Monetary Policy Committee) act immediately to return confidence to UK plc, a major recession can be avoided.
"We are clearly in a very difficult economic period but it is important that we retain a sense of proportion. Many parts of the business community continue to perform well," said BCC Director-General David Frost.
"The government needs to say that business taxes will be cut. The Bank of England need to cut interest rates immediately and politicians need to get behind our businesses in these challenging times," he added.
Greek Olympic Airlines cancels Wednesday flights due to strike
ATHENS, Oct. 6 (Xinhua) -- Greek Olympic Airlines has announced the cancellation of 50 domestic and foreign return flights from Athens on Wednesday due to a 24-hour strike nationwide, according to a report by Athens News Agency on Monday.
Olympic Airlines employees will join the strike, resulting in only one flight per destination locally and one per country abroad.
The strike by the workers in the public transportation sectors will hit Athens Metro service and intercity train service as well.
The General Confederation of Employees of Greece (GSEE) announced a 24-hour strike on Wednesday nationwide for certain public utilities, such as the Greek Railway Organization (OSE), Olympic Airlines and the Greek Post Office.
GSEE is protesting against the government's privatization agenda and reforms of labor and pension benefits in these specific public utilities.
Economic status of Vienna falls
VIENNA, Oct. 7 (Xinhua) -- Vienna's economic status on the list of Europe's Best Cities for Business has dropped to the 26th, said a research report released by Cushman and Wakefield (C and W) on Tuesday.
The findings in the European Cities Monitor report named London, Paris and Frankfurt the top three European cities for business.
Vienna fell from the 24th on the C and W list of the economic status in 2007 to the 26th this year.
Main criteria adopted by C and W for assessing European cities' economic status include personnel's quality, market accessibility, communication's quality, traffic conditions, employment cost. Personnel's quality is considered the most important factor in this year's assessment.
The increasing outflow of many high-quality talents and surgingemployment cost of Vienna served to drag its status down on the list.
Cushman and Wakefield, founded in 1917, is a leading global real estate services firm with about 189 offices operating in 57 countries with over 11,000 employees. Its report serves as an important reference for the capital flow of global multinational companies.
Dutch government grants emergency loan to Fortis
BRUSSELS, Oct. 7 (Xinhua) -- Dutch Finance Minister Wouter Bos has provided Fortis Bank Netherlands, which the Dutch government acquired last Friday, with an emergency loan of 34 billion euros ( 46.2 billion US dollars) to repay short-term loans, Dutch daily Financiele Dagblad reported Tuesday.
According to a letter Bos sent to the Dutch parliament Monday, the credit was needed because Fortis Bank Belgium abruptly ended its liquidity support for Fortis Bank Netherlands on Monday.
The Dutch government paid 16.8 billion euros (22.8 billion dollars) on Friday to fully nationalized the Dutch division of Belgian-Dutch banking and insurance group Fortis, including Fortis' banking and insurance arms in the Netherlands and the ABN Amro operations which Fortis acquired last year.
The move meant that Fortis' activities in the Netherlands are completely separated from those in Belgium and Luxembourg. Bos said on Friday that in this way the Dutch part of Fortis would notbe "infected" by the Belgian part of Fortis. His words has sparkedcriticism from Belgian media and government officials.
Iceland guarantees saving accounts to avoid bank crisis
STOCKHOLM, Oct. 7 (Xinhua) -- Iceland's Prime Minister Geir Haarde said late Monday that the parliament has passed an emergency legislation, which guarantees to protect the saving accounts all bank customers from a national bank crisis.
Under the bill, the country's financial supervisory authority is to take control of commercial bank assets and to appoint the boards. News reports reaching here said the government will take over housing loans and inject government fund into the banks.
"The legislation would help Iceland out because trade in six of Iceland's biggest banks and financial firms has been temporarily halted," said Haarde, adding the danger is real as the Iceland's bank-dominated economy would be sucked along with the banks.
The Icelandic krona has dropped by more than 25 percent against the euro in the past 30 days on concern over the global credit crisis that would cripple the banks and bankrupt the country.
Prime Minister Haarde said the government was only acting with the interests of the nation in mind, even if it means harsh measures against those with vested interests.
British Conservatives announce plan to set up new fund for poverty reduction
| BIRMINGHAM, Britain, Oct. 1 (Xinhua) -- Britain's major opposition, the Conservative party, announced here Wednesday it will set up a fund to fight poverty if it wins the next general election. Andrew Mitchell, shadow secretary for International Development, said in his speech on the last day of the party's national conference that 40million pounds (72 million U.S. dollars) will be earmarked for the new fund so as to support the country's non-governmental organizations (NGOs) and charities to fight poverty. "Rather than relying on a top-down approach to development, we will invite NGOs and charities to take the lead (in poverty reduction across the world)," he said. Mitchell also noted that a Conservative government will offer no aid to China given the fact that China has become a donor in its own right. Nonetheless, the shadow secretary noted the party "will work closely with China as a partner, but not patronize a country which over the last few years has lifted hundreds of millions of its citizens out of poverty." Some 15,000 people have gathered here in Britain's second largest city for the Conservatives' four-day annual party conference, which is widely deemed as a platform to showcase substantial policies to prepare them for winning the next general election. The Conservative party has been garnering an average 40 plus percent of voters' support in the last few months, leading the ruling Labour party by more than 10 percentage points. It is also expected the party could win more support with its proposed plans to revive the country's ailing economy which has entered a grim downturn. | ||
EU approves Bradford & Bingley rescue plan
BRUSSELS, Oct. 1 (Xinhua) -- The European Commission swiftly approved on Wednesday the British rescue aid package for Bradford and Bingley, the British mortgage bank which fell prey to the global credit crunch.
The Commission said it had been in contact with the British authorities over the week-end to support in the design of measures that could comply with competition rules after the bank was forced sought emergency help from the government.
Britain notified the Commission on Sept. 30 and the approval was made within 24 hours in order to ensure financial stability.
"This case shows again that, with good cooperation from the member state concerned, the Commission can move extremely quickly to provide legal certainty for rescue measures," said EU Competition Commissioner Neelie Kroes.
Bradford and Bingley is a Britain-based financial institution, which provides specialist mortgages and savings products. By September 2008, the bank had fallen into difficulties due to the financial crisis and its license to accept deposits was withdrawn by the British Financial Services Authority.
The British government then decided to nationalize the bank and sell Bradford and Bingley's retail deposit book and branches along with a matching cash element to Abbey National, part of Spanish banking group Santander. The measure also included the provision of a working capital facility and guarantee arrangements.
The Commission said its assessment of these measures found that the state funding to enable the sale of the deposit book provided a state aid to Bradford and Bingley and to its retail deposit business that was sold. The Commission also concluded that the working capital facility and the guarantee arrangements constituted state aid.
But the Commission decided the measures could be authorized as rescue aid, which must be given in the form of loans or guarantees lasting no more than six months, except when structural measures are urgently required, which was the case for Bradford and Bingley.
The British authorities have given a commitment to submit a restructuring plan for Bradford and Bingley to the Commission by March 29, 2009.
EU fines wax cartel 676 mln euros for alleged price-fixing
BRUSSELS, Oct. 1 (Xinhua) -- The European Commission decided Wednesday to fine energy giants ExxonMobil, Total and eight others 676 million euros (960 million U.S. dollars) for their alleged price-fixing of paraffin wax used in candles and waxed paper.
European Union (EU) Competition Commissioner Neelie Kroes described it as a "major" case. The fine ranks the fourth largest ever imposed by the EU against price-fixing cartels.
The Commission said the illegal cartel existed between 1992 and 2005 and affected 75 percent of European markets.
Among the ten companies involved, Shell of the Netherlands was fully exempted because it revealed the existence of the cartel to the Commission, while the infringement committed by ExxonMobil, Sasol, Shell and Total also related to slack wax sold to end-customers on the German market.
Slack wax is the raw material used to produce paraffin wax. Paraffin waxes are used in a wide variety of products such as candles, waxed paper, tires and car components as well as in the rubber and packaging.
"There is probably not a household or company in Europe that has not bought products affected by this 'paraffin mafia' cartel, with all that implies in terms of paying over the odds, higher costs and economic damage," Kroes said, "Such illegal cartel behavior cannot and will not be tolerated by the Commission, and companies' managers and shareholders should take note."
The Commission investigation started with surprise inspections in April 2005, prompted by an application for immunity lodged by Shell.
The investigation found the companies held regular meetings to discuss prices, allocate markets and customers and to exchange sensitive commercial information.
In the Shell group, the cartel was called "paraffin mafia" and in the Sasol group "blue saloon."
EU to sharpen banking rules
BRUSSELS, Oct. 1 (Xinhua) -- The European Union (EU) is expected to announce a major reform of its banking rules on Wednesday in response to the current financial crisis which has been unfolding in Europe.
Under a proposal tabled by EU Internal Market Commissioner Charlie McCreevy, banks selling securitized products would be required to retain at least five percent of the products in a bid to improve underwriting standards, a key part of the changes to the 27-nation bloc's Capital Requirements Directive.
"Investors will be required to ensure that originators and sponsors retain a material share of the risks, and in any event not less than five percent of the total, so that effectively, equally originators and sponsors that are regulated by the capital requirements directive and those that are not regulated by it will have to retain a share of the risk," a document outlining the proposal said.
All interbank exposures would be limited to 25 percent of their own funds or below 150 million euros (216 million U.S. dollars), with the higher threshold applying.
In order to improve supervision of trans-national banks, the proposal would call for colleges of supervisors to be set up, but the supervisor from the bank's home country should have a final say in setting overall capital requirements.
The European Commission is expected to adopt the proposal later Wednesday. To become law, the proposal would go to EU governments and the European Parliament for approval.
London stock market reverses heavier losses in closing
LONDON, Sept. 30 (Xinhua) -- The nervous London stock market reversed its earlier heavier losses in Tuesday's closing thanks to signs of a healthy opening on Wall Street.
FTSE 100 index was up 83.68 points, or 1.74 percent, to close at 4,902.45.
However, it has been another difficult session for British banks.
Shares in HBOS -- the British biggest mortgage -- declined more than 20 percent at 122.4 pence, following market speculation that Lloyds TSB could renegotiate its deal to take over HBOS.
Meanwhile shares in Lloyds were up 4.3 percent at 226.5 pence.
Three European countries rush to save Dexia bank
BRUSSELS, Sept. 30 (Xinhua) -- Belgium, France and Luxembourg rushed on Tuesday to provide nearly 6.4 billion euros (9.2 billion U.S. dollars) to save Franco-Belgian bank Dexia, the latest victim of the global credit crunch in Europe.
Belgian Prime Minister Yves Leterme said after all-night negotiations that the Belgian government and other stakeholders would invest three billion euros in Dexia, the French government one billion euros and French state-controlled Caisse des Depots (CDC) two billion euros.
Luxembourg would also invest 376 million euros in Dexia, the world's biggest lender to local governments which is based both in Brussels and Paris.
"This is done to make Dexia able to cope with what is going on in the financial markets," Leterme said in Brussels.
Dexia, which employs about 35,000 people in more than 30 countries, ran into trouble with its U.S. bond insurance unit Financial Security Assurance Inc. (FSA) which was hit hard by the subprime mortgage crisis. It closed nearly 30 percent lower Monday.
Dexia's CEO Axel Miller, who will leave together with Chairman Pierre Richard once replacements are found, said the bank had no choice but to ask for help from the governments.
Dexia was the second Belgian bank this week to get public bailout. This came only two days after Belgium, the Netherlands and Luxembourg agreed to inject 11.2 billion euros to save Belgian-Dutch bank Fortis on Sunday.
High-level talks held to salvage Belgian-Dutch bank Fortis
BRUSSELS, Sept. 28 (Xinhua) -- High-level talks involving the government, financial regulators and banking groups were held in Belgium and the Netherlands over the weekend to try to find a solution to the crisis surrounding Belgian-Dutch bank Fortis, Dutch media reported Sunday.
Dutch Finance Minister Wouter Bos held talks with senior finance officials at the headquarters of the Dutch central bank until just after Saturday midnight, Radio Netherlands reported.
Although the agenda of the talks was not disclosed, Fortis was believed to be in the center of the discussion.
In Belgium, emergency talks have also been held between Fortis representatives, Finance Minister Didier Reynders, the Belgian central bank, the Belgian banking commission and other Belgian banking groups. The Belgian government called the talks in the hope that a solution could be found before the markets open on Monday.
The Belgian-Dutch bank and insurance group is facing a liquidity problem and is trying to sell its assets to raise up to ten billion euros (14.6 billion U.S. dollars). The bank named a new chief executive on Friday as its shares plunged for a fifth day in a row mainly due to a loss of investor confidence.
Despite the company's claims that it was solvent and in no danger of collapse, Fortis shares fell more than 20 percent to 5.18 euros (7.56 dollars) on closing on Friday, hitting a 15-yearlow. Just one year ago its shares were worth 24 euros (35 dollars).
Dutch daily Financieele Dagblad reported Sunday that the bank is considering selling itself or the ABN Amro Dutch banking business it acquired last year. Fortis' massive take-over of part of Dutch bank ABN Amro has prompted market concerns about its funding, which was believed to be the main cause of the turmoil surrounding Fortis since the beginning of this year.
The paper quoted unnamed sources as saying that BNP Paribas could be a potential buyer for Fortis or its ABN business. Meanwhile Dutch financial group ING or Rabobank may be interested in Fortis' private banking business
Eurozone chief calls for quick action on U.S. bailout plan
BRUSSELS, Sept. 26 (Xinhua) -- Luxembourg Prime Minister Jean-Claude Juncker, who also chairs the euro group, called on Friday for quick action on the U.S. bailout plan to remove uncertainty from the market.
"My hope is that the bailout package prepared by the American administration will be approved in one form or another," Juncker told journalists in Luxembourg.
Juncker warned uncertainty surrounding the U.S. bailout plan is threatening European banking industry.
"Banks in Europe that are starting to navigate in difficult waters suffer from this uncertainty," Juncker said, "My hope is that they will do it quickly because, when I look at financial andstock markets, exchange rates and global confidence indicators, the Americans' hesitation over their intentions deepens uncertainty."
"I would appreciate it if the American executive and legislators would approve a solid package as quickly as possible," he added.
U.S. lawmakers were still wrangling on the controversial 700-billion-dollar bailout plan on Friday, which was proposed by the Bush administration to save financial giants from falling in the latest wave of sub-prime mortgage crisis.
"Wall Street has become Red Square. Wall Street has become what was Red Square because even the Russians would not dare nationalizing things this much," Juncker said, referring to the recent moves by the U.S. government to take control of mortgage institutions Fannie Mae and Freddie Mac and insurer American International Group.
"The Americans do not have any other choice than to shoulder the problem that financial markets have given them," he said.
