Europe details new measures to take on banking crisis
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European leaders today pledged more support for their wounded banking system, and provided some specifics that went beyond the general battle plan issued by the Group of 7 industrialized nations on Friday.
From Bloomberg News:
The key measures announced were: a pledge to guarantee until the end of 2009 bank debt issuance of maturities up to five years; permission for governments to shore up banks by buying preferred shares; and a commitment to recapitalize any ‘systemically’ critical banks in distress. ‘We need concrete measures, we need unity, which is what we achieved today,’ President Nicolas Sarkozy said at a news conference in Paris after the meeting of the leaders of the 15 countries using the euro currency. ‘None of our countries acting alone could end this crisis.’ The statement gave no indication of how much governments were willing to spend or the size of bank assets deemed at risk, leaving unclear the ultimate cost to taxpayers. Those numbers will start to emerge Monday, when France, Germany, Italy and other countries announce national measures.
Read the full story here.
The financial-system crisis began in the U.S., but Europe’s credit markets now are locked up, the euro currency has plummeted since late September, and many European stock markets have suffered heavier losses than what the U.S. market has endured. All of that has added to the sense of urgency in European capitals.
Germany’s DAX stock index sank 21.6% last week and now is down 44% from its record high in 2007, compared with the 42.5% drop in the Standard & Poor’s 500 index.
Measured from their record highs last year, France’s CAC index has lost 48.5%, Spain’s main index has fallen 43.6% and the Italian market has dived 54.2%.