Page last updated at 23:02 GMT, Monday, 22 December 2008

Belgian PM's resignation accepted

Prime Minister Yves Leterme
Prime Minister Yves Leterme has only been in office since March

The Belgian king has accepted the resignation of Prime Minister Yves Leterme's government, but asked it to stay on in a caretaker capacity.

Former PM Wilfried Martens has been asked to mediate in efforts to put together a new government. A palace statement said Mr Martens had accepted.

Analysts tip another former PM, Jean-Luc Dehaene, as favourite to head a new interim coalition.

Mr Leterme offered to resign amid a row over the sale of troubled bank Fortis.

The moves come after a series of consultative meetings over the weekend to consider the impact of the government's resignation during the current financial crisis.

Mr Leterme only took office in March, nine months after a general election had resulted in political deadlock founded in tensions between Flemish and Walloon groups.

He tendered his resignation in June after he failed to push through plans to devolve more power to the regions, but the king rejected it.

Court ruling

Fortis bank has been one of the European banks hardest hit by the credit crunch, leaving it desperately short of cash.

A man walks out of a branch of the Fortis bank in Brussels on 18 December 2008
The government is embroiled in a row over the sale of its stake in Fortis

The government was forced to take over and sell nearly all of the company's assets.

Hundreds of thousands of investors were left with virtually nothing and so began a successful legal action effectively preventing the asset sale.

Earlier this month, the Brussels appeal court ruled in favour of the shareholders and froze the sale of most of Fortis to France's BNP Paribas, which was supposed to have been finalised this week.

Last week, Belgium's Supreme Court president said there were "undoubtedly significant indications" that members of the Belgian government had attempted to influence the outcome of the court case.

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