lifeline for BANKS

Governments across Europe yesterday unlocked massive new rescue funds for the stumbling banking sector as stocks soared in expectation of bail-outs set to reach a total of one trillion euros.

Governments across Europe yesterday unlocked massive new rescue funds for the stumbling banking sector as stocks soared in expectation of bail-outs set to reach a total of one trillion euros.

Leaders of the 15-country eurozone single currency bloc, following the lead of Europe's financial giant Britain, agreed on Sunday in Paris on a high-stakes joint bid to pull the world financial system back from the brink of collapse. The new plans saw global stocks soar. The Johannesburg Stock Exchange traded in the black all day yesterday, with the All Share Index closing at 4,16 percent up and the Top 40 up 4,47 percent.

The latest rescue packages:

l German Chancellor Angela Merkel said that financial rescue packages would only work if they were accompanied by improved international regulation that will end "market excesses".

"Today's measures are the first element of a new financial market charter ... but it can only be worthy of the name if it is followed by a second element, namely a change in international rules," Merkel said.

"We were confronted with market excesses," she said after her cabinet approved a ß480 billion (R5,10 trillion) rescue package for Germany's banks.

"As an international community we must at last draw the correct consequences."

She said that this included giving the International Monetary Fund more oversight over financial institutions, an improvement in the work of rating agencies and making sure that financial instruments are backed up by sufficient capital.

l French President Nicolas Sarkozy announced a ß360 billion (R4,5 trillion) bail-out plan to pump capital into the country's banks and underwrite loans between them.

France will guarantee up to ß320 billion of interbank loans taken out until December 2009, and set aside up to ß40 billion to recapitalise French banks, Sarkozy said.

"Nothing will be spared to prevent the crisis getting any worse," he said.

l Austria will provide up to ß85 billion eu ros (R1,06 trillion) in guarantees and up to ß15 billion in equity to prop up its banking sector in the financial crisis.

"In a national effort we are opening an umbrella to protect Austria's banks," Chancellor Alfred Gusenbauer said at a joint news conference with Finance Minister WilhelmMolterer.

"These measures are necessary because of the international financial crisis, not because of Austrian issues."

l Britain waded in with £37 billion (R590,81,billion) of taxpayers' cash for three major banks - Royal Bank of Scotland, HBoS and Lloyds TSB, in a capitalisation move that could make it their main shareholder.

The British government will now own 63 percent of the RBS and 41 percent of HBoS and Lloyds TSB.

Prime minister, Gordon Brown, said government would not be a permanent investor in the banks.

l Japan's Mitsubishi UFJ Financial Group said it has invested $9 billion in US bank Morgan Stanley under revised terms.

Mitsubishi UFJ, Japan's largest bank, said it bought the 21 percent stake, in terms of voting rights, entirely in preferred shares, against a previous plan to buy both common stock and preferred shares.

Mitsubishi UFJ had been seeking more favourable terms for the deal following a slide in Morgan Stanley's share price. - Reuters and AFP

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