Belgium and Luxembourg have said they will take steps to protect the remaining assets of Fortis after its Netherlands business was nationalised.

Belgian Prime Minister Yves Leterme said he aimed to have a solution in place before the European stock markets opened on Monday.

He said the government was in talks with potential suitors, but would not rule out further state intervention.

The news comes after a cross-border rescue plan failed.

Last week, the governments of Belgium, the Netherlands and Luxembourg agreed to to put 11.2bn euros ($15.5bn; £8.7bn) into Fortis to reassure savers and clients about the financial health of the cross-border bank.

Under that deal, each government would have taken a 49% stake in the bank in their respective countries.

But unable to restore confidence in its balance sheet, the Dutch government took full control of its operations in the Netherlands on Friday.

“Fortis is an important and healthy company that has good future prospects” Belgian Prime Minister Yves Leterme

European leaders disagree on pan-regional rescue plan

Crisis of confidence

Governments across Europe are scrambling to restore trust in the region’s financial system as the crisis that broke Wall Street financial giant Lehman Brothers sweeps across the Atlantic.

German property lender Hypo Real Estate, Franco-Belgian bank Dexia and UK bank Bradford & Bingley have all had to be propped up in one way or another by their respective governments.

Analysts say Fortis’ funding problems began after it joined forces with Britain’s Royal Bank of Scotland and Spain’s Santander to buy Dutch bank ABN Amro for 70bn euros last year.

The purchase was agreed just before the US sub-prime mortgage market collapsed, wiping billions of dollars off banks’ investments and paralysing the credit markets.

In interviews with Belgian television and radio stations, Belgian Prime Minister Yves Leterme said takeover talks were being discussed, but that he would not sell the bank in a rushed, cheap deal.

“Fortis is an important and healthy company that has good future prospects,” he said.

“There are other possibilities than just leaving it to a private partner.”

News reported by The BBC

The Netherlands will take full control of the Dutch operations of ailing European bank Fortis in a deal worth 16.8bn euros ($23.2bn; £13.1bn).

On Sunday, the Netherlands, Belgium and Luxembourg governments injected 11.2bn euros into the bank, which has a heavy presence in all three countries.

The Dutch government transaction on Friday does not affect Fortis’ Belgian and Luxembourg operations.

Fortis was the first European bank to fall victim to the credit crisis.

Analysts say the bank’s biggest mistake was joining in – along with Britain’s Royal Bank of Scotland and Spain’s Santander – in the 70bn euro purchase of the Dutch bank ABN Amro last year.

The Dutch government will also take Fortis’ interest in ABN Amro.

As part of Sunday’s action, the three Benelux governments took a 49% stake in Fortis countries in their respective countries.

The Belgian government said on Friday it would retain the 49% stake in Fortis’ Belgian operations it took on Sunday.

News reported by The BBC

US shares clawed back some of Monday’s heavy losses, after President George W Bush renewed calls for Congress to back a $700bn (£380bn) banking rescue plan.

With Wall Street having seen record falls after Congress blocked the deal, the Dow Jones index rose 345 points or 3.3% by mid-afternoon on Tuesday.

Analysts said investors were hopeful a new deal could be agreed this week.

Mr Bush warned that if agreement is not reached, the US economy faces “painful and lasting damage”.

‘Urgent situation’

“We are in an urgent situation and the consequences will grow worse each day if we do not act,” Mr Bush said at the White House.

“It matters little what path a bill takes to become law. What matters is that we get a law.

“We’re at a critical moment in our economy.”

While the Dow Jones reached 10,711.3 points, the other main Wall Street index – the Nasdaq – had advanced 3.8% to 2,060 points.

On the back of the strong gains, European shares closed ahead.

The UK’s FTSE 100 added 1.7%, 83.4 points to 4,902.5, France’s key index added 2% to 4,032.1 points while Germany’s Dax ended 0.4% higher at 5831 points,.

Earlier, Japan’s Nikkei index ended Tuesday down 4.1%, while Hong Kong’s Hang Seng rose 0.8%.

Oil, which had fallen by about $10 a barrel on Monday, also rallied.

Expectations that politicians would pass some form of financial stability plan gave investors hope that demand for energy would increase.

US light, sweet crude rose by $3.88 to $100.25 a barrel while London Brent crude added $3.63 to $97.61.

‘Not dead’

Analyst Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said European investors were hopeful the US would eventually pass the bail-out plan.

“This deal is not dead in the water and there are hopes that when Congress reconvenes it could still go through,” he said.

There were a number of other key financial events on Tuesday:

– In Russia, trading was temporarily suspended on the country’s two main stock markets
– In the Republic of Ireland, the government announced that all bank deposits would be guaranteed for the next two years
– European bank Dexia has received a state bail-out, costing the Belgian, French and Luxembourg governments a combined 6.4bn euros ($9.2bn; £5bn)
– Several banking stocks fell on the FTSE 100 index, with HBOS down 13.8%, Barclays losing 2% and Royal Bank of Scotland slipping 1.1%
– Day of turmoil

The US rescue plan, a result of tense talks over several days between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives.

“I know we need a strong financial sector, but where is the talk of structural change that’s going to prevent recurrence?” Neil, California, US

Send us your commentsAbout two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats.

Congress will not meet again until Thursday – after a break for the Jewish New Year – with another vote unlikely before the weekend, the BBC’s Jonathan Beale in Washington says.

The House’s rejection of the bail-out plan came after a day of turmoil in the US and Europe, with Wachovia, the fourth-largest US bank, being bought by larger rival Citigroup.

Monday also saw the partial nationalisation of Benelux banking giant Fortis by three governments, and UK lender Bradford & Bingley was taken into state ownership.

News reported by The BBC

The Belgian-Dutch bank Fortis has announced it will speed up an asset sale in a move to restore confidence in one of Europe’s biggest banks.

Fortis is selling assets worth up to 10bn euros ($14.6bn; £7.9bn) but it denies it has liquidity problems.

Ever since Fortis announced a significant exposure to sub-prime loans, earlier this year there have been fears of a run on the bank.

Shares have fallen for the past five days in a row.

Fortis interim chief executive Herman Verwilst, the group’s interim chief, said he was “flabbergasted by what is reflected in the market”.

Mr Verwilst said these falls had reflected “lots of nervousness” and “emotions”.

Government guarantees

The Belgian government has reiterated a guarantee that customers’ money will be protected.

Fortis has moved to reassure its customers, saying that their money was safe.

The bank said withdrawals by account holders represented less than 3% of its total retail and private banking customers’ assets in Belgium and the Netherlands.

The bank lost its chief executive in July after Jean-Paul Votron stepped down amid criticism of his handling of problems related to the credit crisis.

Profits at the bank have dropped sharply this year. Last month Fortis announced its profits for the first six months had fallen by 41% to 1.6bn euros ($2.4bn; £1.2bn) against a year ago.

News reported by The BBC