European banks row on Monday to seize the rescue package to shore up its State finances, part of measures to curb a global crisis that has begun to restore confidence between the institutions. The rate banks charge each other for the dollar and euro loans was reduced, suggesting that confidence in the treatment of other lenders is returning to the market. European shares rose by more than two percent on optimism of the financial sector crisis might ease.
The banks were afraid of lending because no one knows for sure what groups were threatened by bad home loans, the freezing of credit lines not only for itself but also to companies.
Merrill Lynch & Co. chief executive said he hoped the measures taken in the United States, where the sub-prime mortgage crisis began, would succeed, while the economy may need years to recover.
“It is likely to take several years to repair the damage that was done,” said John Thain, in Dubai.
“This is not going to get better results in three to six months.”
Governments have pledged about $ 3.3 billion – roughly equal to the economic output of Germany – to guarantee bank deposits and bank to bank loans, and in some cases have taken stakes in banks that have a lot of bad assets.
Germany’s Cabinet adopted strict conditions for banks that make use of its 500 million euros ($ 674 million) rescue package, including limits on managers’ salaries, bonuses and allowances.
“The criteria for adequate (pay) are based on the responsibilities and individual performance, business conditions and the success and prospects of the company compared with others in your field,” the provisions agreed by the Council of Ministers said.
Bavaria’s public sector bank, BayernLB, is ready to ask for funds, Bavaria’s finance minister said. Commerzbank said it would take a close look at the use of funds.
Societe Generale led to a sharp drop in France for three banks of more concern, as may be next in line for state funds.
On Sunday, the Dutch government agreed a 10 million euro cash injection financial group ING, fueling its shares higher by nearly 23 percent.
ING said it had agreed to sell Taiwan from its life insurance unit Fubon Financial to $ 600 million, increasing its capital in an agreement analysts said would benefit shareholders.
“We are in great financial turmoil, and the storm has been building in recent weeks. We wanted to ensure that there was a buffer, a buffer large enough to carry us through the storm,” ING said Chief Financial Officer John Hele CNBC-TV.
In Sweden, the government outlined a plan worth over 1.5 billion kronor ($ 271.5 million), which include loan guarantees and a bail-deep.
“The government is proposing far-reaching measures to alleviate the effects in Swedish homes and businesses in the financial