The Belgian operations of the struggling bank Dexia have been nationalised, and the governments of France and Luxembourg have stepped in with guarantees as European policymakers try to prevent contagion from a potential Greek sovereign default from fatally infecting the eurozone core.
The three governments have agreed to provide €90 billion (£78 billion) in funding guarantees to the bank, which found itself the centre of speculation last week that it was on the verge of collapse. Shares in the bank were suspended on Thursday.
Dexia Banque Internationale à Luxembourg is also now in a sales process, the bank said in a statement on Monday morning.
On Friday, Moody’s Investor Services put Belgium on ratings watch, saying that the country’s deficits may grow if it has to participate in bailouts of its banking sector.
The rating agency said that there was "uncertainty around the impact on the already pressured balance sheet of the government of additional bank support measures which are likely to be needed."
French President Nicolas Sarkozy and German Chancellor Angela Merkel met on the weekend and promised that a new crisis plan to stabilise the euro would be completed in time for the G20 summit in Cannes in November.
Fitch ratings downgraded Spain and Italy after the markets closed on Friday night, but despite contagion fears still rattling the single currency area, the French market opened up slightly on Monday, while the German Dax was trading flat.