Hypo's problems should have been revealed earlier, a minister says
Germany's finance ministry has agreed a 50bn euro ($68bn; £38.7bn) plan to save one of the country's biggest banks.
The deal to save Hypo Real Estate, reached with private banks, is worth 15bn euros more than the first rescue attempt, which fell apart on Saturday.
Germany earlier appeared to announce an unlimited guarantee for private savings and Denmark later followed suit.
The steps brought little comfort to Asian markets, where Tokyo's Nikkei index tumbled 4.7% to a four-year low.
The problems of Hypo Real Estate have put further strain on other financial institutions struggling against a crisis of confidence in the global financial system.
In other developments:
- The turmoil in Europe pushed markets in Japan, Hong Kong and India down by more than 3% in the first trading sessions since the US agreed a $700bn (£394bn) bail-out for its beleaguered financial sector on Friday.
- French giant BNP Paribas confirmed it had agreed to buy 75% of Fortis's operations in Belgium and Luxembourg. In return, the governments of Belgium and Luxembourg will take a minority stake in BNP. The Dutch arm of Fortis has been nationalised by the government of the Netherlands.
- The Icelandic government agreed measures for the country's banks to sell off some foreign assets in a bid to shore up its entire financial system. Iceland's currency last week plummeted 20% against the dollar and the government was forced to bail out the country's third-largest bank, Glitnir.
Berlin's finance ministry said it had acted to stop Hypo Real Estate's collapse in order to avoid "incalculably large" damage to Germany and financial services providers in Europe.
German Chancellor Angela Merkel said managers at financial institutions should be held accountable for "irresponsible behaviour".
Earlier, she moved to reassure German savers all their deposits would be safe.
Similar unilateral guarantees issued by the Irish and Greek governments last week were criticised in Berlin and other European capitals.
But after an emergency meeting with the central bank, Ms Merkel said: "We tell all savings account holders that your deposits are safe. The federal government assures it."
The BBC's Tristana Moore in Berlin says Germany's move will relieve investors and send an important message to the German public that banks will not be allowed to go under.
BBC business editor Robert Peston said the UK Treasury was attempting to clarify the details of Germany's guarantee.
Other EU states - including the UK - may feel they have to follow suit, our correspondent says.
Denmark's government announced just after midnight it would also guarantee all deposits, after its banks agreed to pay into a liquidation fund to take over distressed banks.
Deposits in Danish banks have in the past been guaranteed up to 300,000 crowns ($55,000; £31,000).
The UK finance minister, Alistair Darling, has said he is ready to take "pretty big steps that we wouldn't take in ordinary times" to help the British economy.
On Saturday, leaders of Europe's four biggest economies - Germany, France, Britain and Italy - stopped short of a co-ordinated US-style bank bail-out but vowed to stabilise markets.