By IRNA,
Paris : European nations scrambled on Sunday night to prevent a growing credit crisis from bringing down major banks as troubles in financial markets spread around the world.
The spreading worries came days after the United States Congress approved a $700 billion bailout package that officials had hoped would calm financial markets globally.
The European Central Bank has aggressively lent money to banks as the crisis has grown.
It had resisted lowering interest rates, but signaled that it might cut rates soon.
The extra money, aimed at ensuring that banks would have adequate access to cash, has not reassured savers or investors, and European stock markets have performed even worse than the American markets.
President Nicolas Sarkozy of France and his counterparts from Germany, Britain and Italy vowed to prevent a Lehman-like bankruptcy in Europe but they did not offer an American-style bailout package.
The crisis has underlined the difficulty of taking concerted action in Europe because its economies are far more integrated than its governing structures.
Unlike in the United States, where deposits are fully guaranteed up to a limit of $250,000 – a figure that was raised from $100,000 last week – deposits in most European countries have been only partially guaranteed, sometimes by groups of banks rather than governments.
The Paris meeting produced a promise that European leaders would work together to halt the financial crisis and reassure nervous investors, but even before the meeting began it was becoming clear that two bailouts announced the week before had not succeeded and that a major Italian bank might be in trouble.
That bank, Unicredit, announced plans on Sunday to raise as much as 6.6 billion euros, or $9 billion, in capital.
Fortis, which only a week ago received 11.2 billion euros from the governments of the Netherlands, Belgium and Luxembourg, was unable to continue its operations.
On Friday, the Dutch government seized its operations in that country, and Sunday night the Belgian government helped to arrange for BNP-Paribas, the French bank, to take over what was left of the company.
While the European Central Bank has power over interest rates and broader monetary policy, it was never granted parallel oversight of private banks, leaving that task to dozens of regulators across the Continent.
This patchwork system includes national central banks in each of the euro-zone’s 15 members and they still retain broad powers within their own borders, further complicating any regional approach to solve the problem.