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European banks rescue plan agreed European banks rescue plan agreed
(30 minutes later)
European leaders meeting at an economic crisis summit in Paris have pledged that no major financial institution will be allowed to collapse. European leaders meeting in Paris have agreed a plan to tackle the banking crisis, saying no big institution will be allowed to fail.
They also pledged to guarantee loans between banks until 31 December 2009, so as to address the liquidity crisis. They pledged to guarantee loans between banks until the end of 2009, and said they would put money into them by buying preference shares.
The reluctance of banks to lend to one another has been a key problem of the financial crisis sweeping the globe. French President Nicolas Sarkozy said they were taking unprecedented steps.
World governments have been racing this weekend to throw banks a lifeline before markets reopen on Monday. World governments have been racing to throw banks a lifeline before the major markets re-open on Monday.
News of the rescue plan came from French President Nicolas Sarkozy - the current European Union head - after hours of talks between leaders of the 15 countries in the Euro single currency zone. News of the rescue plan came from Mr Sarkozy - the current European Union head - after hours of talks between leaders of the 15 countries in the Euro single currency zone.
UK Prime Minister Gordon Brown - not a member of the eurozone club - also attended parts of the talks.UK Prime Minister Gordon Brown - not a member of the eurozone club - also attended parts of the talks.
Britain announced a similar plan last week.
Mr Sarkozy said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares.Mr Sarkozy said leaders had agreed a framework in which individual countries would be able to inject capital into their own banks by means of preference shares.
He said governments in Germany, France and Italy among others would be presenting their individual plans on Monday, within the agreed framework.He said governments in Germany, France and Italy among others would be presenting their individual plans on Monday, within the agreed framework.
"The crisis has over the past few days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach," he said."The crisis has over the past few days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach," he said.
Mr Sarkozy said the guarantees would be at commercial rates, and he stressed that what he called defective managers would be removed - and rash shareholders would not benefit from the public intervention.Mr Sarkozy said the guarantees would be at commercial rates, and he stressed that what he called defective managers would be removed - and rash shareholders would not benefit from the public intervention.
He said the plan addressed all aspects of the financial crisis. However, he did not say how much it would cost.He said the plan addressed all aspects of the financial crisis. However, he did not say how much it would cost.