European banks rescue plan agreed

BBC News ^ | 10/13/2008

[Republicain]

European leaders meeting in Paris have agreed a plan to tackle the banking crisis, saying no big institution will be allowed to fail.

They pledged to guarantee loans between banks until the end of 2009, and said they would put money into them by buying preference shares.

French President Nicolas Sarkozy said they were taking unprecedented steps.

World governments have been racing to throw banks a lifeline before the major markets re-open on Monday. News of the rescue plan came from Mr Sarkozy - whose country currently holds the rotating presidency of the EU - after talks between leaders of the 15 countries in the euro currency zone.

UK Prime Minister Gordon Brown - not a member of the eurozone club - attended parts of the talks. Britain announced a similar plan last week.

Mr Sarkozy said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares. He said governments in Germany, France and Italy among others would be presenting their individual plans on Monday, within the agreed framework. "The crisis has over the past few days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach," he said.

Mr Sarkozy said the guarantees would be at commercial rates, and he stressed rash financiers would not benefit from the public intervention. "Where managers are at fault they will be dismissed," he said.

[RobinOfKingston]

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