LONDON — European governments had to step in with a flurry of major bank bailouts from Iceland to Germany on Sunday and Monday as fear and turmoil from the U.S. credit crisis spread through the financial system.
The governments of Belgium, the Netherlands and Luxembourg took partial control late Sunday of struggling bank Fortis NV, while Britain seized control of mortgage lender Bradford & Bingley early Monday.
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Germany organized a credit lifeline for blue-chip commercial real estate lender Hypo Real Estate Holding AG, while Iceland's government took over Glitnir bank, the country's third largest.
The rapid-fire European bailouts were quickly followed by news that U.S. financial giant Citigroup Inc. was acquring the banking operations of troubled Wachovia Corp., the latest U.S. financial institution to fail or be sold. Citigroup will absorb losses of up to $42 billion in a government-facilitated takeover.
European shares fell heavily and money markets remained frozen with banks refusing to lend to one another for all but the shortest periods.
"All banks are having difficulty with long term loans and short term financing. It's difficult to say which could be affected," said UniCredit economist Alexander Koch in Munich.
Shares in Fortis, Belgium's largest retail bank, continued to fall Monday after Belgium, the Netherlands and Luxembourg agreed to an 11.2 billion euro ($16.4 billion) bailout package late Sunday to avert a run on the bank. The three governments took a 49 percent stake in exchange and demanded Fortis sell the stake it had bought in ABN Amro a year ago for 24 billion euros, a move that some analysts believe started its troubles.
In other international news, Latin American stocks plunged Monday as U.S. lawmakers rejected the $700 billion bailout package meant to reboot the global economy.
Sao Paulo's Ibovespa stock index led losses, tanking 13.8 percent before regaining some ground late in the session, even as Brazil's president insisted contagion from the world financial crisis would be small.
Trading was automatically halted for 30 minutes after the Ibovespa crossed the 10 percent loss threshold. After selling resumed, the index was down 9.5 percent in late afternoon trading at 45,065.
So far, no Latin American banks have neared insolvency.