More banks come under government control in Europe

LONDON, Sept. 29 Kyodo - Europe on Monday witnessed a wave of moves by governments to nationalize troubled banks and bail out financial institutions amid the ongoing financial turmoil triggered by the U.S. subprime mortgage crisis.

Belgium, the Netherlands and Luxembourg said Monday they will partially
nationalize troubled Belgian banking group Fortis NV, while the British
government announced the same day that it will do likewise with the nation's
largest buy-to-let mortgage lender Bradford & Bingley PLC.
The government of Iceland said it will virtually nationalize struggling Glitnir
bank by purchasing a 75 percent stake for 600 million euros.
The German government, meanwhile, said it has saved Hypo Real Estate Holding
AG, the nation's leading realty finance company, from going bust by providing
an emergency rescue package of up to 35 billion euros jointly with a consortium
of private banks.
The latest moves by European governments are likely to fuel concern that the
health of financial institutions in the region could deteriorate further.
The three Benelux governments said they will inject 11.2 billion euros into
Fortis to control a 49 percent stake in Belgium's biggest banking group, which
has a strong foothold in the financial sector of the Benelux region.
The British government said that it had sold B&B's retail deposits and branch
networks to Spain's Banco Santander as part of efforts to help the struggling
bank out of its financial mess.
Fortis, which acquired Dutch bank ABN Amro last year as part of a consortium
with the Royal Bank of Scotland and Banco Santander, has been having difficulty
raising funds amid losses connected to the subprime mortgage crisis.
The Belgian government, alarmed by Fortis' falling share price, had approached
BNP Paribas SA and ING Group NV about a possible merger. But the negotiations
broke down over the weekend.
As for B&B, Banco Santander, the biggest financial services company in the
eurozone, will pay 612 million pounds to acquire the British mortgage lender's
21 billion pound deposit book and 197 branches, while the rest of its business
will be nationalized.
B&B is the second British bank to be nationalized this year. Northern Rock was
placed under government control in February.
Analysts said that with the U.S. Congress set to vote on a bill for a $700
billion package to buy bad assets, European countries need to implement
fundamental measures to cope with the ongoing credit crunch.