Relief in Germany as bail-out agreed for Hypo Real Estate

There is huge relief in Germany after news that the government and the banking sector have agreed a rescue package for the stricken lender Hypo Real Estate It is understood the financial sector has agreed to add 15 billion euros to an initial 35 billion offered in an earlier deal. Hypo is Germany's fourth largest bank. It has been teetering on the brink since rescue talks collapsed last week. German Chancellor Angela Merkel was forced to reassure the public, insisting that all savings accounts with Hypo were guaranteed by a 500 billion euro insurance system. Meanwhile, its being reported that BNP Paribas has agreed with the governments of Belgium and Luxembourg to take control of the key remaining assets of troubled financial group Fortis. The French banking group is said to be about to take 75 percent of Fortis Bank Belgium and 67 percent of Fortis Luxembourg in a share swap with the two governments, which would get stakes in the bank in return. Unicredit, Italy's second-biggest bank, will ask it's shareholders for an extra three billion euros in funds and offer shares instead of a cash dividend this year. After a five hour board meeting yesterday, the bank said it now expected earnings per share of 39 cents, down from a previous forecast of 52. The Danish government has also announced it will guarantee all deposits in its banks, after agreeing a slush fund of six and a half billion euros.

EuroNews | October 6, 2008

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