October 4, 2011
Pressure to inject fresh capital into Europe's weakest banks mounted today as the chancellor, George Osborne, and officials in Brussels united in efforts to prevent contagion from the deepening Greek sovereign debt crisis.
Amid fears that €3.4bn (£2.9bn) of exposure to Greek debt would bring down Franco-Belgian bank Dexia, tensions were rising across the banking sector and pressure mounted on the European Central Bank to be more generous in loans to banks to prevent a rerun of the 2007 credit crunch.
The gloom that has lingered over the banking industry since August deepened further as Germany's biggest bank, Deutsche Bank, warned it would miss its profits target and the cost of insuring major US banks against default reached levels last hit in October 2008.
The share prices of many banks were tumbling as the chancellor and Anders Borg, the Swedish finance minister, urged colleagues to prop up banks with public funds, despite fierce resistance from the French who insist Europe is not at risk.
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