Credit crisis hits Russian markets, Dutch bank
Last Updated: Friday, October 3, 2008 | 3:38 PM ET
CBC News
The Dutch government took over a major bank Friday, while Russian markets ended a chaotic week with big losses and halts ordered by regulators.
In both cases, the actions resulted from the widening international credit crisis.
The Dutch move was taken "under the current exceptional circumstances" to safeguard the depositors and other bank customers and ensure "vital financial functions" continue, the government said in a release.
The government said it was buying the Dutch banking and insurance operations of Fortis Bank Holding for 16.8 billion euros (about $25 billion Cdn), replacing a partial nationalization announced last Sunday.
The Netherlands government said the purchase gives it Fortis's stake in international bank ABN Amro Holding. But the insurance and banking businesses Fortis ran in Belgium and Luxembourg were not affected by Friday's deal.
In Russia, the benchmark RTS index closed down seven per cent at 1,070.9 points as regulators halted trading three times to try to stop the drop.
The MICEX index, where more trading take place, fell 5.3 per cent to 924.6 points.
Deal follows investment
The Dutch move followed an initial step to save Fortis last Sunday, when Belgium, the Netherlands and Luxembourg invested 11.2 billion euros. The bank's market value had crashed and it was perceived to be over-leveraged.
On Tuesday, Belgium, France and Luxembourg said they put 6.4 billion euros ($9.6 billion Cdn) into Dexia, another European bank. It has asked for financial help, CEO Axel Miller said.
Also Friday, Canadian auto parts maker Magna International Inc. said its Russian shareholder had been forced to give 20 million Magna shares to the shareholder's banker.
The shares had been pledged as security for the loan OJSC Russian Machines took on last year to buy into Magna.
With files from the Associated PressShare Tools
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