Hoo, boy ...
Just when we thought the drama could not get much hotter.
Check this:
BELGIUM’s Fortis is this weekend poised to become the first large continental bank to fall victim to the credit crunch, as the global chaos continues with Bradford & Bingley and American savings giant Wachovia both teetering on the brink.
The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a £540 billion balance sheet and a market value of £12 billion.
Fortis is an enormous banking concern ... and it was about to get bigger, being on the verge of completing an acquisition of Dutch banking giant ABN AMRO in the third quarter of 2009.
Just how big is Fortis? Well, it's balance sheet is about $800 billion, making it a very large bank, bigger than Washington Mutual or Wachovia. Fortis is one of the premier European financial institutions, comparable perhaps to Citibank or Bank of America in the U.S.
And its bigger -- much bigger -- than the entire GDP of Belgium, its home country.
Whoops.
What happens when a bank whose finances are bigger than your entire country's GDP fails?
Part two of the article linked above concerns B&B, a smaller British bank, whose story has many eerie parallels with that of Washington Mutual, which died on this side of the Atlantic last week:
In Britain, the fate of Bradford & Bingley will be decided today. Frenetic talks between the Bank of England, the Financial Services Authority and the government have been taking place this weekend to save the troubled mortgage bank.
Santander, the Spanish bank, is in negotiations to buy B&B, but it is insisting on a stringent set of conditions. The talks are being led by Antonio Horta-Osorio, chief executive of Santander’s UK bank, Abbey.
Another option being pursued by the government and the FSA is to carve up B&B. This would result in the sale of its £20 billion deposit business, its 197-strong branch network and its troubled mortgage book. These assets would be auctioned to the highest bidder.
It's starting to look more and more like we're just seeing the Act One of this crisis now. How the play will end is anyone's guess at this point.