AIG bailout 'prevented European banks needing to raise $16bn'

14 June 2010

European banks would have had to raise around $16 billion worth of capital at the height of the financial crisis if the government bailout of American International Group (AIG) had not gone ahead.

According to a report by the Congressional Oversight Panel, firms which had bought derivatives from AIG would have been in serious trouble if AIG had been allowed to fail at the height of the financial crisis in 2008.

ABN Amro was highlighted as one bank which would have required around $3.5 billion if AIG had collapsed, reports Bloomberg.

Jonathan Hatcher, a Jefferies Group desk analyst and former Federal Deposit Insurance Corporation bank examiner, said the institutions "would've needed to come to the capital markets in a time when it would've been nearly impossible to raise that kind of capital".

AIG has received a total of $182 billion from the US government since a primary bailout of $85 billion was handed over in September 2008.

By Gary Cooper

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