Iceland to repay foreign savers

 

Iceland has reached an agreement with several European countries, including the Netherlands and Great Britain, to repay European savers with money in frozen Icelandic bank accounts. The government in Reykjavik has said it will pay back European savers a maximum of 20,000 euros.

The Dutch Finance Ministry sees the announcement as a breakthrough. Following the collapse of the Icesave bank, the Netherlands agreed in principle that Iceland would pay investors back 20,000 euros. But it then proved difficult to realize this agreement. Financiers expect the agreement will be speedily implemented and that savers will find out soon when they can expect to receive their money.

Europe now wants to help Iceland solve the deep recession into which the country has sunk and will support it in its request for large-scale loan from the International Monetary Fund.

The Crisis, as seen through the eyes of students

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Dutch Goverment Agrees with 10Billion to “ING”

The Dutch government is going to inject 10 billion euros into ING, one of the world’s 20 biggest banks. The agreement between ING, the finance ministry and the Dutch central bank was announced by Finance Minister Wouter Bos. Speaking at a news conference, he said the government was investing in a healthy business so it could face the future with confidence. The move comes two days after ING announced it expected a 500-million-euro net loss in the third quarter as result of the financial crisis and asset depreciation. The announcement caused ING shares to drop 27.5 in value.

Netherland Companies “Hit Hard”Due to Economic Crisis

An increasing number of large Dutch companies are suffering from the economic fall out from the credit crisis. Yesterday alone, four companies reported profit declines or production cuts as a result of the worsening economy, the Financieele Dagblad reports.

TNT, the post and parcel delivery company, said it would cut costs at its air freight division because of pressures on profits and turnover. Supermarket wholesaler Sligro said it expected profits to be lower than originally expected this year. Meanwhile both steel producer Corus and truck maker DAF Trucks said they would be cutting production due to declining demand.

Over past few days, electronics giant Philips, coatings group Akzo Nobel, chip machine maker ASML and printer and copier concern Océ have all said they were facing problems as a result of the economic downturn sparked by the financial crisis.

Fortis to change name

The chairman of the board of governors of Fortis Nederland, Jan van Rutte, has announced that the bank and insurance giant is to change its name. According to Mr van Rutte, the name has acquired a negative connotation due to the global financial crisis. Last month, in a deal with governments of Belgium, the Netherlands and Luxembourg, the Dutch-Belgian Fortis banking group was nationalised. Fortis was a victim of the global financial meltdown and was unable to raise enough money to finance its share of the purchase of the ABN-Amro banking group. The Royal Bank of Scotland, Banco Santander and the Fortis group bought ABN Amro 18 months ago.

Mr van Rutte says it is not yet clear what the new name will be. The consequences for Fortis’ sports sponsorship contracts are also unclear; the banking group sponsors a number of teams including the Dutch Premier league club Feyenoord.

Dutch Finance Minister Wouter Bos has announced that Michael Enthoven has been appointed to the Fortis board of governors. He is currently working for the public prosecutor’s office. Until the beginning of this year, Mr Enthoven ran the Dutch private investment bank NIBC. He resigned after a takeover of Iceland’s Kaupthing Bank fell through. According to Minister Bos, Mr Enthoven will receive the same salary at Fortis as he did as a public prosecutor. The Dutch finance minister says the bank’s bonus policies will be scrapped now that the state is the majority shareholder.

Bad investments in the Netherlands

A growing number of Dutch provinces and councils have revealed huge investments in the now-bankrupt Lehman Brothers bank and in Iceland’s failed financial institutions. The Dutch government says that more than 250 million euros worth of taxpayers money had been invested or deposited in now-bankrupt financial institutions. It is not yet clear if it will be possible to get any of the money back.

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European leaders agree on inter-bank loans

Dutch banks on Monday welcomed the decision by European leaders to guarantee inter-bank loans up to the end of 2009 in an effort to restore confidence in the financial markets.

‘It is good that there is a coordinated European plan which can help restore calm and stability,’ a spokesman for the Dutch banking association told the Telegraaf.

On the Amsterdam stock exchange, traders reacted positively to the deal. By 3pm, the AEX was up 6.5% at nearly 275 points.

On Sunday, prime minister Jan Peter Balkenende said the deal, thrashed out between the 15 eurozone countries in Paris, said the deal was extremely important.

Money movements

‘Money has to move between banks again, that makes the economy stronger and offers more financial opportunities,’ Balkenende was reported as saying by the Financial Dagblad. ‘If there is no credit any more, financial resources will dry up.’

European leaders also agreed that no big financial institution will be allowed to collapse. And they pledged to put money into banks by buying preference shares.