Europe forced into bank rescues as crisis spreads

By Philip Blenkinsop and Reed Stevenson

BRUSSELS/AMSTERDAM (Reuters) - European governments scrambled to shore up banks on Monday, carving up firms and committing billions of euros as the credit crisis tore through Germany, Britain, Belgium and beyond.

The moves came as $700 billion (388 billion pound) bailout plan for U.S. financial firms faced a vote by the House of Representatives on Monday and Citigroup (C.N) said it would buy the bulk of fourth-largest U.S. bank, Wachovia WB.N.

Lawmakers hope to unfreeze global markets gripped by the worst crisis since the Great Depression of the 1930s.

In the biggest European bank bailout since the credit crisis began, the Belgian, Dutch and Luxembourg governments took a 49 percent stake in Fortis (FOR.BR) (FOR.AS) with a 11.2 billion euro (8.9 billion pounds) injection.

The rescue of Fortis, the biggest private employer in Belgium, followed emergency talks with European Central Bank President Jean-Claude Trichet on Sunday. The bank employs 85,000 staff globally.

"The question was whether Fortis would have survived on Monday," Dutch Finance Minister Wouter Bos told reporters. The firm's chairman, Maurice Lippens, resigned.

The German government and a consortium of banks said they would provide 35 billion euros in credit guarantees to lender Hypo Real Estate HRXG.DE, whose shares plunged more than 60 percent in morning trade.

"The purpose of the whole operation is to allow an orderly winding down of Hypo Real Estate," a German finance ministry spokesman said.