A Look At The European Banking Situation
European governments moved to rescue some major banks over the weekend, in an effort to contain the financial turmoil that has spread from the U.S.
Here's a list of some of the banks that got lifelines, some that may be struggling, and some that may stand to profit from the mess in the long run.
Fortis — The giant European banking and insurance company was partly nationalized this week by the Benelux countries, Belgium, the Netherlands and Luxembourg. Finance ministers from the three countries agreed to rescue the failing giant with an investment of more than $16 billion. Fortis' CEO Filip Dierckx said the company got in over its head when it bought part of a struggling Dutch bank last year.
Bradford & Bingley — The British government has confirmed that it will take over the major mortgage lender Bradford & Bingley. The government is buying about $92 billion worth of B&B's mortgages and loans, and it is selling the bank's branches and its savings deposits to the Spanish bank Santander. Officials say people who put their savings into the bank will be protected.
Hypo Real Estate — The German government agreed to back a consortium of banks that put together a $51 billion bailout package for Hypo, the second-largest commercial-property lender in Germany. Analysts said Hypo was likely to suffer big losses on its real estate loans.
Glitnir — Iceland's central bank bought a 75 percent share in the country's third-largest bank, saying that Glitnir was about to collapse. The government put nearly $900 million into the bank, which has operations in 10 countries.
And here are some other banks and institutions feeling the pinch:
Dexia — Rumors swirled through the European banking sector that this Brussels-based bank could be looking for a rescue. Dexia shares dropped more than 28 percent in trading on Monday. Other banks drawing investor scrutiny were the Royal Bank of Scotland, whose shares fell more than 8 percent, and Swiss-based UBS, which was down more than 5 percent.
Ping An Insurance — Analysts say Fortis' troubles will hurt its biggest shareholder, the Chinese insurance company Ping An. Its shares fell nearly 10 percent on Monday.
HSBC — The London-based bank HSBC announced that it will cut about 1,100 jobs worldwide, about half of them in the United Kingdom. The bank, which has a global workforce of around 335,000 people, announced the cuts after it was forced to write off about $14 billion in bad debts, most of them in the U.S. In February 2008, The Banker magazine declared HSBC the world's most valuable banking brand.
And some banks may be poised to get bigger by absorbing weaker banks:
Banco Santander — This Spanish-based bank got a bargain by picking up Bradford & Bingley's 197 branches for about $1.1 billion. The branches come with nearly $30 billion worth of deposits. Santander is the second-largest bank in Europe, and analysts say it is well-capitalized and could expand further.
Barclays Bank — Barclays shares were down nearly 9 percent on Monday, but analysts say the London-based company is among Europe's better-capitalized banks and could be among the bargain hunters as weaker banks are sold off. Barclays picked off some of the operations of the bankrupt Lehman Brothers.
BNP Paribas — The giant French bank was hit by the subprime mortgage crisis last year but remains the second-largest bank in the Eurozone in terms of market capitalization, according to The Banker. There has been speculation that BNP Paribas could be looking at a merger with Societe Generale, the France-based bank that was shaken last year by a fraud case.