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New bank bailouts take shape to deal with 2009

MOSCOW/MADRID (Reuters) - Russian government sources on Tuesday outlined a new $27 billion banking bailout, while other European countries showed they were ready to take similar action to defend against the continuing economic crisis.

A Swedish newspaper reported on Tuesday that its government was also set to present in the coming weeks a programunder which state capital could be injected into the banking sector.

In nearby Finland, Finance Minister Jyrki Katainen reiterated his country’s readiness to provide funds to banks to help jump-start lending.

His comments came as Finland unveiled extra stimulus measures for exporters, tripling the amount of export credit available through financing company Finnvera to 3.7 billion euros ($4.9 billion).

In Russia, government sources said the government plans a 900 billion rouble ($27.4 billion) capital injection for commercial banks hit by the economic crisis, with state-controlled lenders set to receive the largest share.

Sberbank, Russia’s biggest lender, is likely to receive a 500 billion rouble subordinated government loan, one source told Reuters, citing a decision taken at a meeting of the government’s anti-crisis committee.

The government source, speaking on condition of anonymity, said another state-controlled bank, No. 2 Russian lender VTB, would get 200 billion roubles as part of the latest rescue package.

Other commercial banks would share a total of 100 billion to 200 billion roubles. Privately owned banks are waiting to find out the criteria for loan applications before deciding whether to apply for the state funds.

Prime Minister Vladimir Putin’s chief spokesman Dmitry Peskov told reporters the new capital injections were still under discussion and no final decisions had been made.


In Spain, government and financial sector officials said the government could bail out banks if necessary but it had no plans to buy toxic assets brought about by the collapse of the property sector.

Spanish financial sector sources said they did not expect an imminent rescue for their banking sector but said the government was working out final details on how to do it, having passed the necessary legislation last year.

“If the moment comes, it will be done,” said an economy ministry spokeswoman of the government’s preparedness to inject capital, though she said this was not yet necessary.

“The economy ministry is not working on any measures to buy any toxic assets,” she said.

Swedish business daily Dagens Industri quoted that country’s Financial Markets Minister Mats Odell as saying its support program might include “everything from hybrid capital injections and other forms of capital injections to participating in issue programs at market terms.”

Such measures were included in legislation approved by parliament in October last year to mitigate the strains of the global credit crunch, but so far only Swedbank of Sweden’s four big banks -- which also include Nordea, Handelsbanken and SEB -- has chosen to join the program.

Additional reporting by Niklas Pollard and Brett Young; Writing by Hans Peters, editing by Will Waterman