The Swedish government presented a vast plan worth 1.5 trillion kronor (US$206.1 billion) to help its financial sector if it comes under more pressure from the global financial crisis.
“The stability plan gives the government a mandate to manage problems such as liquidity shortages or potential solvency problems in the future, under predictable forms and where taxpayers’ interests are protected,” it said in a statement.
Swedish Finance Minister Anders Borg has repeatedly stated that the country’s banks are in good financial shape and not in need of any handouts from the state.
But the banks have been affected by the global liquidity shortage.
Financial institutions with liquidity problems will therefore be allowed to apply for loans from the 152.2 billion euro (US$204 billion) so-called “guarantee program.”
The loans will be granted for a fee and with specific conditions attached, including restrictions on management’s bonuses, raises and golden handshakes.
In addition, the government said it would create a 15 billion kronor “stability fund” to help banks in case of potential solvency problems in the future.
The proposal also enables the state to provide capital to banks in exchange for shares, and in certain situations to become a shareholder through forced redemption of shares.
The plan will be available to Swedish banks and financial institutes until April 30, though the government reserved the right to extend it until the end of next year at the latest.
Berlin plans “targeted measures” to boost Europe’s largest economy but no major stimulus package in response to the financial crisis and slowing growth, the government said yesterday.
German Chancellor Angela Merkel asked the economy and finance ministers at a Cabinet meeting yesterday to develop ideas over the next few weeks to boost certain industries hit by the crisis, spokesman Thomas Steg said.
“The chancellor spoke out [at the Cabinet meeting] specifically against a vague, traditional, wide-ranging credit and economic program financed by new borrowing,” Steg told a regular news conference. “But what could be helpful in this situation are very precise, very targeted measures to stimulate investment for certain industries.”
German lawmakers passed a 480 billion euro rescue package last week for the country’s banks aimed at providing capital to cash-strapped lenders and guaranteeing loans.
The Dutch government announced on Sunday that it would inject 10 billion euros into ING in the latest global finance crisis rescue.
“It is a large sum that we are injecting into a healthy business and that is why we can look into the future with confidence,” Dutch Finance Minister Wouter Bos told a press conference.
The accord between ING, which manages about 630 billion euros of assets, the finance ministry and the Netherlands central bank came after ING on Friday announced that it expected a 500 million euro net loss in the third quarter because of the turmoil and asset depreciation.
Its share price fell 27.5 percent amid market rumors about difficulties at the bank. Under the rescue plan, ING could be made to pay 150 percent of the amount put into the company, or after three years transform the figure into shares.
All of the bank’s top managers have given up their annual bonuses and if any leaves none will receive a payment of more than one year of their salary, the minister said.
Senior officials from Asian nations will meet in Manila next month to mull a Philippine proposal for an emergency fund to help the region weather the financial crisis, a finance minister said yesterday.
Philippine officials met in Washington earlier this month with finance ministers from the ASEAN bloc plus Japan, South Korea and China to seek agreement on the standby fund, Filipino Finance Secretary Margarito Teves said.
The ministers agreed to hold a “technical working group meeting in Manila” on the standby fund, which would help Asian nations with liquidity problems, he said.
Teves told a news conference that the Manila meeting on the proposed fund to be called the “ASEAN Preparedness Plan” was tentatively set for Nov. 12.
He said the Philippines hoped the proposal would win endorsement from leaders of 13 countries meeting at the ASEAN summit in Bangkok on Dec. 18.
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