France and Germany have announced an injection of billions of euro into their banking systems following agreement by eurozone leaders on measures to deal with the financial crisis.
Under the package, agreed last night, countries can buy shares in financial institutions.
The German Chancellor Angela Merkel has said her cabinet approved a €480bn rescue plan for banks in Germany.
Announcing a €320bn plan for France's banking system, President Nicholas Sarkozy said the financial crisis was a global one and the time for everyone acting alone was now over.
Earlier, the British government decided to inject £37bn of taxpayers' money into three banks - HBOS, Lloyd's TSB and the Royal Bank of Scotland.
Barclays said it will not have to turn to the government for emergency recapitalisation and will be raising £6.5bn from investors but will not be paying a final dividend for 2008, saving the group £2bn.
Royal Bank of Scotland Chief Executive Fred Goodwin has stepped down as RBS looks to recover from the credit crunch.
Meanwhile the EU Commission approved the Government's €400bn guarantee that covers six Irish-owned banks and five foreign-owned financial institutions.
The announcement came as Taoiseach Brian Cowen returned from Paris where EU leaders had agreed on a big funding programme for banks and businesses.
Under the programme governments can use taxpayers’ funds to put new capital into the banks, either by buying bank shares or debt instruments issued by the banks.
It is the biggest move yet by European countries to mount a co-ordinated, system-wide effort to beat the credit crisis and Eurozone countries have agreed that they can do virtually anything to prevent bank failures.
Countries can now invest in bank equity to improve tier one capital rations and can buy up, insure or guarantee debt instruments issued by banks.
Eurozone countries can now take ‘toxic assets’ as collateral for government bonds.
Governments have also encouraged the European Central Bank to start lending directly to big businesses through a commercial paper market, hoping that if big businesses get finance they will use it to pay the small businesses that supply them, boosting the flow of cash.
They also want a suspension of the so-called mark-to-market accounting rules to try to halt the slide in the value of bank assets.
It will be up to each country individually to decide on which measures, if any, are needed.
