US leaders reached a deal on Sunday over the rescue of the financial industry and expect a complicated vote in the Senate on Monday. Meanwhile, banks in Europe are facing moves to save them from bankruptcy, with Fortis, Bradford&Bigley and Hypo Real Estate seeing interventions by the government in the Benelux and UK or by a consortium in Germany.
In the US, Republican negotiator Judd Gregg announced an understanding providing the Treasury Secretary with the authority, resources and flexibility to apply a 700 billion USD rescue plan for the financial sector.
The plan allows the Treasury to buy risky assets of foreign banks with significant operations on US territory and would immediately release 250 billion USD for urgent operations with future payments due to be agreed by the Congress later.
Treasury Secretary Henry Paulson said huge progress was made to reach a functional understanding which would be efficient on the market.
Late on Sunday night, Belgium, Netherlands and Luxembourg announced they have decided to partially nationalize one of the biggest European banks, Fortis, to save it from bankruptcy. The three countries will take over parts of the national branches of Fortis for 11.2 billion euro in an attempt to prevent the extension of the US financial crisis in Europe.
In Britain, the British government is decided to nationalize the Bradford&Bingley bank to prevent its bankruptcy and is discussing tthe sale of its loan and deposits assets as well as its units, according to sources quoted by Reuters on Sunday.
And in Germany, the Hypo Real Estate bank HRE was saved from bankruptcy by a banking consortium that covered the necessary loans to continue its activities, Die Welt reports. HRE, listed on the Frankfurt exchange, has been facing difficulties because its subsidiary Depfa.