BELGIUM: Members of Dexia board meet to seal the dismantling of the Franco-Belgian bank -- the first casualty of the euro zone sovereign debt crisis

Record ID: 784665

  • Title: BELGIUM: Members of Dexia board meet to seal the dismantling of the Franco-Belgian bank -- the first casualty of the euro zone sovereign debt crisis
  • Date: 10th October 2011
  • Summary: BRUSSELS, BELGIUM (OCTOBER 9, 2011) (REUTERS) ( * BEWARE FLASH PHOTOGRAPHY **) EXTERIOR OF DEXIA HEADQUARTERS WITH JOURNALISTS WAITING DEXIA LOGO ON TOP OF ENTRANCE DEXIA LOGOS ON BANNERS ON SIDE OF BUILDING DEXIA BOARD MEMBER ARRIVING, SAYING (IN FRENCH) 'NO COMMENT' DEXIA BOARD MEMBER GETTING OUT OF CAR DEXIA BOARD MEMBER ENTERING BUILDING THROUGH THE WINDOWS, BOARD MEMBERS REGISTERING AT FRONT DESK OTHER BOARD MEMBERS ARRIVING, ENTERING BUILDING THROUGH THE WINDOWS, BOARD MEMBERS LEAVING RECEPTION DESK TO PASS GATES THROUGH THE WINDOWS, OTHER BOARD MEMBERS REGISTERING AT FRONT DESK BOARD MEMBER ENTERING DEXIA LOGO ON BANNER ON THE SIDE OF DEXIA BUILDING, MAN WALKING UNDERNEATH BANNERS WITH DEXIA LOGO
  • Embargoed: 25th October 2011 13:00
  • Keywords:
  • Location: Belgium, Belgium
  • Country: Belgium
  • Topics: Business,Finance
  • Reuters ID: LVA56UFA3NSLB13R8V4BXVF1PFGO
  • Story Text: Members of the board of Dexia arrived on Sunday (October 9) for a meeting set to seal the dismantling of the Franco-Belgian lender, which has global credit risk exposure of $700 billion. That's more than twice the size of Greece's gross domestic product.
    The board meeting came a few hours after a meeting between Belgium, France and Luxembourg.
    After the meeting, the office of Belgium caretaker Prime Minister Yves Leterme said the three countries agreed a rescue plan. That solution would be presented to the Dexia board of directors for approval, Leterme's office also said without providing further details of the rescue plan.
    Dexia is the first bank to fall victim to the euro zone sovereign debt crisis.
    It was forced to seek government help this week after a liquidity crunch hobbled the lender and sent its shares into a tailspin.
    Dexia, which used short-term funding to finance long-term lendings, found credit drying up as the euro zone debt crisis worsened. This problem has been exacerbated by the bank's heavy exposure to Greece.
    Dexia's near collapse stoked investors' anxieties about the strength of European banks and coincided with growing talk about coordinated European Union action to recapitalise banks across the continent.
    Dexia's overhaul will likely see its French municipal financing arm split from the group and merged with French state bank Caisse des Depots and Banque Postale, the French post office's banking arm.
    The Belgian government wants to nationalise Dexia's largely retail banking business in Belgium.
    Healthy units, such as Denizbank in Turkey, will be sold.
    A 'bad bank' supported by state guarantees will hold 95 billion euros in bonds, including 12 billion euros of sovereign debt of weaker euro zone periphery nations.
    Including 7 billion euros of securities linked to U.S. mortgages, France and Belgium may need to provide guarantees to cover up to 200 billion euros of assets, which would be more than 55 percent of Belgian GDP.
    The key issues for Sunday's talks will be how to divide up the 'bad bank' assets, how much Belgium should pay to nationalise Dexia's Belgian banking business and whether others, such as Belgium's regions, would be involved in its purchase.
    Dexia's shares have been suspended since Thursday (October 6) afternoon and have lost 42 percent since last Friday (October 7). ($1 = 0.741 Euros)
  • Copyright Holder: REUTERS
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