Europe's crisis-hit banks unveiled further job cuts and billions of euros more in losses on Monday but shares in ING and Barclays led a share recovery on hopes they are getting to grips with the financial crisis.
ING said it faced a 2008 loss of 1 billion euros, ousted its chief executive and cut 7,000 jobs, but news the Dutch government was guaranteeing assets on more generous terms than expected boosted banks across Europe.
Britain's Barclays helped the revival by saying it had no need to raise capital and remained profitable despite an 8 billion pound ($11 billion) 2008 writedown.
BNP Paribas, France's biggest bank by market capitalisation, said it expected to post a fourth-quarter net loss of around 1.4 billion euros ($1.8 billion) hit by writedowns, and its shares also rose.
By 1500 GMT Barclays shares were up 68 percent at 85.8 pence, after almost halving last week on fears it needed capital. ING shares rallied 30 percent to 6.86 euros and BNP rose 14 percent to 24.5 euros.
The DJ Stoxx European bank index was up 6 percent at 124 points, putting it on course for its biggest rise since Dec. 8. The index has still lost 17 percent this year.
ING shares were buoyed by the government guarantee, and analysts said the structure of the Dutch deal increased optimism governments elsewhere may take on more of the asset risks.
"It's just a major relief," said Theodoor Gilissen analyst Paul Beijsens about ING. "At the moment we can't predict whether the market will get worse. ING may need more help, but at this point they addressed a major risk."
ING unveiled a sweeping shake-up that will cut about 5 percent of its 130,000 jobs and see CEO Michel Tilmant replaced by board chairman Jan Hommen.
It said the Dutch government would cover 80 percent of its 27.7 billion euros in subprime and slightly better quality mortgages. The government will take on the risk at a 10 percent discount to par value and receive 80 percent of any cash generated from the portfolio.
TOUGH, BUT PROFITABLE
BNP said it now expects a 2008 profit of about 3 billion euros, down from about 4 billion expected by analysts, according to Reuters Estimates.
"The fourth quarter was marked by exceptionally violent movements in the capital markets, especially in the equity markets," BNP said.
Both BNP and SocGen plan to take part in a second tranche of support of 10.5 billion euros which the French government is due to launch.
Barclays, whose shares crashed two-thirds in the last two weeks, took the unusual step of issuing an open letter from its chairman and chief executive to address worries.
The bank said it was not seeking funds from private investors or the UK government and had seen "a good start to 2009" and repeated its forecast of 2008 profits of over 5.3 billion pounds. It moved its results forward to Feb 9.
Royal Bank of Scotland also announced 750 job cuts at Irish unit Ulster Bank.
The turmoil in financial markets is forcing lenders to revamp operations across Europe, including in the asset management sector as fund managers grapple with clients withdrawing their money and writedowns on investments.
French banks Credit Agricole and Societe Generale announced plans to merge their asset management arms, which would create Europe's fourth largest.
The new company will be 70 percent owned by Agricole and 30 percent owned by SocGen.
