Banking crash hits europe

The global credit crisis has hit Europe over the last two days, triggering five major bank rescues and a near total shut-down of the region's credit markets...

The Dutch-Belgian bank Fortis, Britain's Bradford & Bingley, and Iceland's Glitnir, were all partially or fully nationalized after failing to roll-over debts in the short-term money markets, while the French state pledged support for the Franco-Belgian lender Dexia after the share price collapsed on reports of a capital shortage.

Germany's Hypo Real Estate, a commercial property lender, was rescued with a £20 billion lifeline from a consortium of local banks. The lender has £300 billion in liabilities, almost as much as Lehman Brothers.

Hypo Real's share price crashed 74 per cent, setting off a masse exodus from financial stocks in Frankfurt.

Europe's credit markets have come close to seizing up as three-month Euribor jumped to a record 5.22 per cent and OIS spreads rocketed to 113 basis points.

The euro plunged on yesterday as the wave of bank failures hit the newswires, dropping two per cent.

Source: The Daily Telegraph and www.propertyweek.com