- Title: VARIOUS: Europe strives to combat financial crisis in unison
- Date: 7th October 2008
- Summary: MADRID FINANCIAL DISTRICT EXTERIOR OF BBVA HEADQUARTERS SIGN WHICH READS 'BBVA' PEOPLE WALKING AROUND FINANCIAL DISTRICT/EXTERIOR OF CAJA MADRID HEADQUARTERS CLOSE UP OF CAJA MADRID LOGO PEOPLE WALKING IN FRONT OF CAJA MADRID HEADQUARTERS MAN WITHDRAWING MONEY FROM CAJA MADRID CASH POINT PEOPLE WALKING IN FRONT OF CAJA MADRID BRANCH SIGN WHICH READS BBVA PEOPLE WALKING OUTSIDE BBVA BRANCH SIGN OUTSIDE BBVA BRANCH MAN WITHDRAWING MONEY FROM BBVA CASHPOINT VARIOUS OF EXTERIOR OF SANTANDER BRANCH VARIOUS OF WOMAN AT SANTANDER CASHPOINT
- Embargoed: 22nd October 2008 13:00
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- Topics: International Relations,Economic News
- Reuters ID: LVAAA8VKW539MGH90PIHRBNQDLN3
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- Story Text: In a flurry of activity related to the spiralling financial crisis, French President Nicolas Sarkozy meets with bank leaders and also with the Belgian Prime Minister Yves Leterme, Spain's prime minister holds talks with the country's top bank executives, and Britain's finance minister appeals for coordinated action.
European governments struggled on Monday (October 6) to shield banks and bank depositors from a global financial crisis that is eroding confidence, endangering the economy and challenging their ability to respond as one.
Germany promised blanket deposit protection for bank savers, prompting similar responses from Austria, Denmark and Sweden, days after Dublin took more draconian deposit insurance measures in a bid to restore confidence in the banking system.
French President Nicolas Sarkozy issued a statement in which the 27 European Union countries committed to do what was needed to counter market mayhem and ensure no savers lost any money. His country holds the EU's rotating presidency.
As the politicians busied themselves to prevent panic, banks were prominent losers as European shares suffered their worst one-day percentage fall on record on Monday, sinking to four-year closing lows.
Sarkozy discussed the crisis with the heads of major French banks, and held talks with Belgian Prime Minister Yves Leterme on the troubled Franco-Belgian bank, Dexia.
"Today's declaration from the 27 EU countries testifies to the management of the crisis at the European level," said George Pauget, chief executive of Credit Agricole, on the steps of the Elysee palace.
"In France, given the fast changing nature of this crisis, we have organized to hold regular meetings with the French president and to ensure that the dossiers move forward. That is what is happening. We have also made progress concerning the solvency and liquidity of financial companies in order to guarantee the financing of the economy."
Leterme and Sarkozy promised concrete measures to help Dexia.
"We really believe in Dexia's future, its possibilities,"
said the Belgian prime minister. "It is a strong Belgian-French bank. And in the coming days we will make decisions and create initiatives together to strengthen Dexia."
The French stock market, the CAC 40, fell 9.04 percent on Monday, the largest drop since its launch in 1988.
Shares in Britain's banks also fell sharply on fears the government would seek partial ownership in return for support.
The government said it was prepared to take "big steps" to restore confidence and get the financial system working properly again, but finance minister Alistair Darling did not detail any specific measures.
"It's essential that we take action to both support the banking system as a whole, as well as being ready to intervene in particular cases when it's necessary to do so," he said in a speech to parliament.
He also stressed the need for coordinated action from Europe's governments.
"Each country needs to do whatever is needed to deal with its own particular circumstances. However, I also believe that wherever it is possible to do so, countries should work together, and act to maintain stability,"
said Darling.
At 1530 GMT, Royal Bank of Scotland was the biggest loser among FTSE 100 banks, down 22.2 percent. HBOS fell 18.4 percent, and Barclays was off
4 percent.
Spanish Prime Minister Jose Luis Rodriguez Zapatero met with the leaders of the main Spanish banks to discuss the world financial situation and its impact on Spain.
The meeting took place at the Moncloa Presidential Palace, with the Presidents of the Santander, BBVA, Popular, La Caixa, Unicaja and Caja Madrid Banks in attendance, to allow the Spanish Prime Minister to hear different opinions on the strength of the Spanish financial system and how it should be run, according to a government spokesperson.
The meeting came hours after European shares tumbled to 4-year closing lows as investors dumped shares across the board and Wall Street slumped.
The pan-European FTSEurofirst 300 index fell 7.4 percent to a provisional close of 1,008.86 points, beating a 6.3-percent fall on Sept. 11, 2001, the day militants destroyed the World Trade Center buildings in New York.
The index briefly slid below the 1,000 mark for the first time since late 2004 shortly after the Dow Jones industrial average slipped below 10,000 points on Wall Street.
Strict Bank of Spain reserve and investment regulations have shielded the Spanish banking system from the initial impact of the international financial crisis.
However, banks now face liquidity difficulties as the crisis drags on and domestic debt defaults rise following the collapse of a decade long residential construction and property boom in Spain.
Spain said it was prepared to act unilaterally on bank deposit guarantees if the European Union failed to reach a common plan to combat the crisis.
Spanish Economic Minister, Pedro Solbes, repeated on Monday (October 6) his preference for a joint European solution, but is prepared to make a unilateral decision.
In Spain, the current system guarantees savings up to 20,000 euros, relying upon its Savings Guarantee Fund (Fondo de Garantia de Depositos - FGD).
Zapatero will meet with French President Nicolas Sarkozy in Paris on Friday (October 10) to discuss the international financial crisis. - Copyright Holder: REUTERS
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