Latest developments

Following this weekend's crisis talks in Paris, here's a quick summary of what has been implemented:


- Until the end of next year 2009, member states will guarantee new bank debt issues maturing at the latest in 2013;
- Eurozone governments are allowed to take equity stakes in distressed private banks in order to keep them from going bankrupt. Individual member states are still evaluating how much tax payer money will need to be injected into each national banking system. Portugal has pledged €20 billion. And Norway, ironically a non eurozone member, has pledged €40 billion.
- Analysts at Goldman Sachs estimate that European banks need to raise capital by €350 billion, roughly in line with my own estimate (check it "here")
- The ECB has denied it will buy Commercial Paper as the FED decided to do last week.
- Banco Santander buys US Sovereign Bancorp and becomes Europe's second largest bank in market value.


- Government has taken a controlling stake in Royal Bank of Scotland and HBOS. It has also taken a minority stake in Lloyds TSB. All together, today's action is worth around €45 billion.
- Barclays is raising about €8 billion from private sources, but may be the next to turn to Gordon Brown's government.


- The FED in conjuction with the ECB, the BoE and the Swiss National Bank is committing limitless dollar funds to covered bank issues, therefore, eliminating any barriers in the REPO market for temporary liquidity lending.

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