Business Insider reports:
EU leaders are actively looking for ways recapitalize European banks in a coordinated plan, according to an FT report.
Finance ministers concluded that banks are suffering from funding concerns and that markets will need to be convinced they can withstand the crisis.
“Capital positions of European banks must be reinforced to provide additional safety margins and thus reduce uncertainty,” Olli Rehn told the FT. “This should be regarded as an integral part of the EU’s comprehensive strategy to restore confidence and overcome the crisis.”
While Rehn and others have admitted to funding problems in European banks before, this time he suggests that Europe — rather than just member states individually — must take “a concerted, co-ordinated approach” to stem bank fears.
German Finance Minister Wolfgang Schaeuble added that Berlin could reactivate capitalization mechanisms put into place in 2008.
The Dow was down over 200 points when this report surfaced at 3:19 PM. It ended up over 150 points on the day. Bank stocks also made a complete turnaround on the news, with Morgan Stanley up over 10% in 40 minutes.
Even though markets are bouncing back, however, the details of any plan to recapitalize the banks are unknown. Any coordinated measures would likely need approval from national governments, something that the finance ministers meeting today can’t promise.
Comment by Wickus:
This is clearly grasping at straws. The financial world is turning into a joke. Somewhere, some EU leaders are LOOKING for a plan and out of desperation stocks skyrocket. Tomorrow the financial world realize that there is no plan, then everything nosedives again. This is just to show how men will grasp at anything that will give them hope in these turbulent times. One day someone will come with a great plan to stabilize the economy and promise great growth IF trade is controlled by marking every human being.
And the world will do it out of desperation, not knowing what will befall them.