Bankers scrambled to complete mergers and win government backing for emergency rescue packages yesterday as Europe’s once-proud financial sector resembled a jungle in which only the fittest are likely to survive.

As panic ripped through markets, banks across the Continent threw aside strategic planning as they sought to ward off the spectre of bankruptcy.

Dexia, the Franco-Belgian bank, and UniCredit, of Italy, looked to be among the potential prey last night as action by executives and governments in Brussels and Rome failed to reassure investors. Alarm over the biggest banking crisis for 80 years was fuelled by claims that shareholders in Fortis, the Benelux bank, had effectively suffered expropriation as part of a state-brokered rescue.

Hypo Real Estate, the German lender, was in a slightly safer position after a €50 billion (£38 billion) bailout, largely backed by the Government – the second such measure in a week.

Amid the chaos, a few banks – such as BNP Paribas, of France, Santander, of Spain, and HSBC, of Britain – looked well-placed to swallow weaker rivals, according to analysts. Although Dexia, a specialist in lending to local government, received a €6.4 billion bailout from France, Belgian and Luxembourg last week, it appeared to be heading for a break-up last night as its shares fell by a fifth to €6.80.

Commentators said that Dexia’s French and Belgian activities were likely to be split as authorities in Paris and Brussels sought to prevent a cash drain. However, uncertainty shrouded Financial Security Assurance, Dexia’s American bond insurance division and the source of its troubles after a loss of almost $1 billion (£575 million) in the past three quarters.

BNP Paribas struck earlier as it bought Fortis assets in a €14.5 billion deal organised by the Belgian Government. Authorities nationalised Fortis’s Belgian and Luxembourg banking division before ceding a 75 per cent stake to BNP Paribas through an issue of 132.6 million new shares worth about €9 billion. The Belgian State will keep a 25 per cent stake in the banking activities in Belgium and Luxembourg.

BNP Paribas – set to become the eurozone’s biggest bank, by deposits – will also pay €5.5 billion cash for all of Fortis Insurance Belgium. However, in an indication of just how far expectations have shifted in the crisis, the Belgian Government will take an 11.1 per cent stake in BNP Paribas, making it the French group’s biggest shareholder. The Luxembourg Government will take a 1.1 per cent stake.

Baudouin Prot, BNP Paribas’s chief executive, said that the presence of two states – highly improbable only a few months ago – would bring stability in troubled times. He added that the deal would give his bank a better capital ratio, bigger earnings from the first year, total deposits of €600 billion and 20.9 million customers.

Under the deal, Fortis will hive off €10.4 billion of risk-laden assets into a structured credit portfolio in which BNP Paribas will take a 10 per cent stake and Belgium a 24 per cent stake.

Fortis’s rescue saga began when it was partly nationalised a week ago as the Belgian, Dutch and Luxembourg governments injected €11.2 billion to try to calm market fears. Their salvage operation was meant to involve a sale of the stake that Fortis bought in ABN Amro, the Dutch bank, for €24 billion in a takeover led by Royal Bank of Scotland (RBS). However the Dutch were forced to nationalise Fortis’s banking and insurance activities in the Netherlands for €16.8 billion on Friday.

The move angered Belgian officials and prompted the late-night deal with BNP Paribas, which had tried to buy Fortis last week but failed when its bid was rejected as insufficient. Analysts said that the delay had benefited BNP Paribas, which had ended up obtaining Fortis assets at an attractive price.

RBS denied that it would have to write down the value of its own ABN Amro assets because of the Dutch and Belgian deals.

With Fortis’s shareholders claiming that they had been left with little more than its toxic debt, Didier Reynders, the Belgian Finance Minister, was put on the defensive by suggestions that they had, in effect had assets expropriated. Mr Reynders said: “We hope to get Fortis shareholders to participate in its future results.” The tie-up with BNP Paribas “aims above all to safeguard savers 100 per cent”, he said.

In Italy, attention remained focused on UniCredit, its second-biggest bank by market value, which on Sunday announced a €6.6 billion capital increase, two days after ruling out any such step. Its shares were suspended amid extraordinary volatility after Alessandro Profumo, its chief executive, admitted: “We made some mistakes in evaluating the market scenario. That is absolutely clear.”

UniCredit’s capital-raising will involve a €3 billion share issue and payment of a dividend in new shares instead of cash – a step that the bank says will keep a further €3.6 billion in its accounts. However, investors remained nervous of its exposure outside Italy – notably in Germany, where it acquired HVB, the lender, in 2005, for €19.2 billion.

Germany’s authorities were in a race against time to restore confidence in Hypo Real Estate, the struggling lender, after Germany’s banks agreed to increase a credit line by €15 billion to €50 billion. The Government has said that it would guarantee half the sum, but admitted yesterday that it may have to increase its guarantee. As the Bundesbank made short-term liquidity available to Hypo, the Finance Ministry insisted that it was “fundamentally sound”.

Last night, in a further attempt to build confidence, a promise was made to guarantee the survival of Europe’s key banks and insurance companies by the 16-nation Eurogroup of countries in the single currency. Jean-Claude Juncker, the Luxembourg Prime Minister, who chairs the Eurogroup, said that the precise method of guaranteeing their survival would be discussed by the finance ministers of all 27 EU nations at their monthly meeting today.

A week of salvage operations throughout Europe

— Dexia: €6.4 billion bailout by France, Belgium and Luxembourg; may yet be broken up as shares fall

— Fortis: €14.5 billion rescue package organised by Belgian Government after the Dutch business nationalised for €16 billion on Friday

— UniCredit: €6.6 billion capital increase through share issue and dividend paid in new shares

— Hypo Real Estate: €50 billion bailout organised through the German Government after first attempt by banks failed at the weekend

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