Second Belgian bank gets bail-out

by Dave Keating | September 30, 2008 at 03:30 am

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A second Belgian bank has had to be rescued by a coalition of the Luxembourg, Belgium and Netherlands governments. The announcement that Dexia will be bailed out comes one day after the countries announced they would bail out Fortis bank.

Across Europe panic is growing that large banks are going to fail, and many European countries don't have guarantees on consumer savings such as the FDIC in the US. French President Nicolas Sarkozy has announced there will be a rapid development of such a program for France by the end of the week in response to the crisis, and he is hoping other European nations will follow the example to prevent bank runs.

Dexia has become the latest European bank to be bailed out as the deepening credit crisis shakes the banks sector.

After all-night talks the Belgian, French and Luxembourg governments said they would put in 6.4bn euros ($9bn; £5bn) to keep it afloat.

Shares in the Belgian-French bank fell 30% on Monday before being suspended on Tuesday as the bail-out was announced.

It is the second bank rescue in days by Belgium and its neighbours. On Sunday Fortis bank was partly nationalised.