Big players are no stranger to crises on own doorsteps
Published 26/03/2011 | 05:00
THE major European countries weighing in on Ireland's banking crisis have had extensive experience of their own financial sector implosions.
Germany has spent more than two years bailing out embattled commercial property lender Hypo Real Estate, returning to the European Commission in September to ask for permission to guarantee another €40bn of the collapsed bank's assets.
Some €200bn of Hypo's assets are being sent to a "bad bank" to be wound down Anglo-style. Other German banks such as WestLB and BayernLB were given billions of euro in aid, after returning massive losses. Germany recently drew up plans to impose a fresh tax on banks so they can bear the cost of future bailouts. Even banks that make losses will have to pay a minimum levy to the fund, which is expected to raise €1bn a year.
France unveiled a €360bn bank rescue plan in October 2008 as banks such as Societe General and the Caisse d'Epargne floundered under their massive exposure to futures and exotic derivatives.
The measures resulted in €40bn being ploughed into recapitalising fragile banks, and another €320bn for loan guarantees. After a tough 2008/9, France's banks returned to form last year, with Societe General and BNP Paribas together returning profits of more than €11bn.
The UK banks' bailout is so massive it dwarfs even Ireland's.
By the end of 2009, the British government was supporting its banks to the tune of £850bn (€960bn), including £200bn (€227bn) of liquidity support, guaranteeing £250bn (€285bn) of wholesale borrowing to other banks and splashing out £76bn (€86bn) on shares in Royal Bank of Scotland and the Lloyds Banking Group -- which have both made multi-billion losses on their Irish operations.
UK banks have made a good start to 2011 though, with HSBC recently reporting that its profits doubled to £11.8bn last year and Lloyds booking profits of £2.2bn for 2010.
Spain's banks went through their own "stress tests" a fortnight ago and were told to raise an extra €17bn to cushion the blow of future losses.
The country has been attempting to mop up the implosion of its small savings banks, a process that ratings agency Moody's now believes could cost between €40bn and €50bn.
In the big leagues, Spain's Banco Santander spent €3.1bn buying AIB's stake in Poland's Bank Zachodni. But the bank has had its issues at home, with fourth-quarter profits for 2010 coming in behind expectations.