Germany clinches bank rescue deal

Germany's finance ministry has agreed a 50bn euro ($70bn; £40bn) plan to save one of the country's biggest banks.

The deal, reached with private banks, to save Hypo Real Estate is worth 15m euros more than the first rescue attempt, which fell apart on Saturday.

Germany earlier announced an unlimited guarantee for all private savings, and Denmark later followed suit.

The steps brought little comfort to Asian markets, where Tokyo's Nikkei index tumbled 3.6% to a four-year low.

The South Korean currency also fell nearly 5%, hit by foreign currency shortages.

Monday saw the first session of the Asian markets since the US agreed a $700bn (£394bn) rescue plan for its beleaguered financial sector on Friday.

The problems of Hypo Real Estate have put further strain on other financial institutions struggling against a crisis of confidence in the global financial system.

French giant BNP Paribas confirmed on Sunday night it had agreed to buy 75% of Belgium and Luxembourg holdings of the giant Fortis financial group.

The governments of Belgium and Luxembourg will in return take a minority stake in BNP Paribas. The Dutch arm of Fortis has been nationalised by the Netherlands government.

And the Icelandic government agreed measures for the country's banks to sell off some foreign assets in a bid to shore up its entire financial system.

Iceland's currency last week plummeted by a fifth against the dollar and the government was forced to bail out the country's third largest bank, Glitnir.

'Irresponsible behaviour'

Berlin's finance ministry said it had acted to stop Hypo Real Estate's collapse in order to avoid "incalculably large" damage to Germany and financial services providers in Europe.

German Chancellor Angela Merkel said managers at financial institutions should be held accountable for "irresponsible behaviour".

Earlier, she moved to reassure German savers all their deposits would be safe.

Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals.

But after an emergency meeting with the central bank, Ms Merkel said: "We tell all savings account holders that your deposits are safe. The federal government assures it."