Nationalisations and rescues stepped up in finance debacle

PARIS – The international finance chaos deepened yesterday with Iceland nationalising another bank, Russia setting up a huge rescue package for its banks and markets again panicking.

But an air of debacle hung over the turmoil as banks frantically sought dollars at exorbitant interest rates while Russia denied it had made an emergency four-billion-dollar loan to Iceland, which is battling to fight off national bankruptcy. European Union finance ministers went into an emergency session with officials saying they might establish an EU-wide bank deposit guarantee of 100 000 euros (N$135 000).Iceland, its banks frozen by debt and the credit crunch, nationalised its second largest bank, Landsbanki and gave the biggest bank Kaupthing a 500-million-euro (678-million-dollar) loan.Glitnir bank, the third largest, was nationalised last week.In Russia, President Dmitry Medvedev promised credit of up to 36 billion dollars to support the country’s banks.He told an emergency meeting of ministers and bankers at the Kremlin that loans could last for up to five years.Distressed global stocks endured another rollercoaster ride of rallies and losses after the devastating falls on Monday.London added 0.66 per cent, reversing losses in early trading, after its 7.8 per cent slump Monday.Frankfurt similarly gained 0.82 per cent and Paris 1.33 per cent after diving 7.0 and 9.0 per cent respectively on Monday.In Asia, Tokyo fell by 3.0 per cent, while Sydney jumped 1.7 per cent after Australia’s central bank sprang a surprise interest rate cut.Again there was no hiding from the financial panic.Egypt’s CASE-30 stock index fell 14.5 per cent in early trading.”There’s panic, everything is down, it’s incredible,” said Ahmed Hefanoui, a Cairo analyst with investment bank EFG Hermes.The EU finance ministers meeting turned into a war council to fight the conflagration consuming the global financial system.The European Central Bank yesterday pumped 50 billion dollars (37 billion euros) back into interbank money markets, but it said banks sought more than double that amount.The ECB said 67 eurozone banks had requested more than 109 billion dollars, and paid a whopping 6.75 per cent for dollars made available in the daily attempt to keep cash flowing through the financial pipeline.The US Federal Reserve and Treasury said they were studying making unsecured loans in an effort to keep much-needed credit flowing.The Fed said it would start to pay interest on bank deposits and expand bank loans to up to 900 billion dollars by year-end in a bid to increase liquidity.The US government approved a law on Friday to buy up 700 billion dollars of bad mortgages and other assets from banks, which would wipe debts from their books in hopes they will be able to start lending more freely again.- Nampa-AFPEuropean Union finance ministers went into an emergency session with officials saying they might establish an EU-wide bank deposit guarantee of 100 000 euros (N$135 000).Iceland, its banks frozen by debt and the credit crunch, nationalised its second largest bank, Landsbanki and gave the biggest bank Kaupthing a 500-million-euro (678-million-dollar) loan.Glitnir bank, the third largest, was nationalised last week.In Russia, President Dmitry Medvedev promised credit of up to 36 billion dollars to support the country’s banks.He told an emergency meeting of ministers and bankers at the Kremlin that loans could last for up to five years.Distressed global stocks endured another rollercoaster ride of rallies and losses after the devastating falls on Monday.London added 0.66 per cent, reversing losses in early trading, after its 7.8 per cent slump Monday.Frankfurt similarly gained 0.82 per cent and Paris 1.33 per cent after diving 7.0 and 9.0 per cent respectively on Monday.In Asia, Tokyo fell by 3.0 per cent, while Sydney jumped 1.7 per cent after Australia’s central bank sprang a surprise interest rate cut.Again there was no hiding from the financial panic.Egypt’s CASE-30 stock index fell 14.5 per cent in early trading.”There’s panic, everything is down, it’s incredible,” said Ahmed Hefanoui, a Cairo analyst with investment bank EFG Hermes.The EU finance ministers meeting turned into a war council to fight the conflagration consuming the global financial system.The European Central Bank yesterday pumped 50 billion dollars (37 billion euros) back into interbank money markets, but it said banks sought more than double that amount.The ECB said 67 eurozone banks had requested more than 109 billion dollars, and paid a whopping 6.75 per cent for dollars made available in the daily attempt to keep cash flowing through the financial pipeline.The US Federal Reserve and Treasury said they were studying making unsecured loans in an effort to keep much-needed credit flowing.The Fed said it would start to pay interest on bank deposits and expand bank loans to up to 900 billion dollars by year-end in a bid to increase liquidity.The US government approved a law on Friday to buy up 700 billion dollars of bad mortgages and other assets from banks, which would wipe debts from their books in hopes they will be able to start lending more freely again.- Nampa-AFP