Government bailouts are on the rise — with Italian airline Alitalia becoming the latest prominent examples in three different countries.
Alitalia received an emergency loan of $480 million from that nation’s outgoing government after Air France-KLM withdrew its takeover offer, according to Agence France-Presse, citing Italian media reports. Italy’s outgoing center-left prime minister, Romano Prodi, reportedly said the bridge loan will be repaid by the end of the year.
According to the report, a European Commission spokesman said Alitalia could not receive state aid until 2011 under European Union rules.
Meanwhile, in February the British government nationalized mortgage lender Northern Rock Plc, making it the first UK bank casualty of the credit freeze stemming from the collapse of the U.S. subprime market, according to Bloomberg News. Last September, Bank of England Governor Mervyn King had extended loans and guarantees to Northern Rock.
Further, earlier this week the Bank of England announced a major $100 billion rescue package for Britain’s financial system, described by the Associated Press as one of the biggest moves by a central bank to repair confidence amid the global credit crisis. That funding will be provided via a swap of assets designed to increase liquidity and ease restrictions in the mortgage market by encouraging interbank lending.
And the third country to bail out a company? The U.S., of course, where the Federal Reserve offered a $30 billion credit line to help JPMorgan Chase work out a deal to acquire Bear Stearns — a move many observers asserted would help head off a global collapse of the financial markets.