Arab Today, arab today belgium to take control of dexia bank\s local arm
Last Updated : GMT 11:50:01
Arab Today, arab today
Arab Today, arab today

Belgium to take control of Dexia Bank\'s local arm

Arab Today, arab today

Arab Today, arab today Belgium to take control of Dexia Bank\'s local arm

Brussels - AFP

Belgium will take total control of the local arm of the troubled Franco-Belgian bank Dexia in a 4.0 billion euro deal, Prime Minister Yves Leterme said Monday after a cabinet meeting in Brussels. France, Belgium and Luxembourg said earlier Sunday they had reached a deal to dismantle Dexia, the first victim of the eurozone debt crisis, in a proposal that will be submitted to the Dexia board. Leterme told a news conference that the takeover of Dexia Bank Belgium would \"make secure\" the retail bank and free it from \"any risks resulting from the environment within parent body Dexia SA\". \"Households can be sure and certain that their money is safe in their current accounts,\" he said, adding that \"the taxpayer will not be called on to contribute too much as the risk is under control and the cost of the operation is relative.\" Finance Minister Didier Reynders told the press conference that the 4.0 billion euro offer for Dexia Bank Belgium was \"reasonable\". \"With this agreement the wish of the Belgian government is not to remain indefinitely in (control of) its bank nor to leave rapidly but to ensure its continuity,\" he said. Reynders said Belgium would guarantee the financing of the future \"bad bank\" that would remain to hold high-risk assets after the dismantling of the Dexia group, to the tune of 60.5 percent, or 54 billion euros. The guarantee by the three states -- France, Belgium and Luxembourg -- where Dexia is present amounted to 90 billion euros, he said, against 150 billion when it was first rescued in 2008 at the start of the global financial crisis. The trio \"agreed to share out the guarantee in identical proportions to those of 2008, or 60.5% for Belgium, 36.5% for France and 3% for Luxembourg,\" Reynders\' office said in a statement. The guarantee \"demonstrates the major efforts made by the Belgian, French and Luxembourg governments in favour of financial stability within the eurozone,\" it said. Press reports had said Paris pushed for Brussels to make the larger commitment, to avoid any threat to France\'s prized \"AAA\" credit rating. On Friday, ratings agency Moody\'s said it had placed Belgium\'s credit worthiness under review and that a downgrade was possible partly over the Dexia bailout plans. Luxembourg is reportedly in the advanced stages of selling Dexia\'s Luxembourg operations, Dexia BIL, to an unnamed international investor. All three governments involved were keen to finalise a deal before stock markets open on Monday. The NYSE Euronext stock exchange suspended trading in Dexia shares on Thursday following a request of the Belgian market regulator, FSMA. Trading in the stock was halted during a session in which it had fallen 17.24 percent to 0.85 euros per share. Dexia had relied heavily on money market funding for its operations, but such financing has become scarcer and more expensive for eurozone banks due to concerns over their sovereign debt exposure. Meanwhile Russia\'s largest bank Sberbank is looking to acquire Dexia\'s Turkish subsidiary DenizBank, according to media reports. And Germany\'s Der Spiegel magazine said Dexia\'s German unit was also fighting for survival due to heavy exposure in indebted European countries. The subsidiary Dexia Kommunalbank Deutschland AG made loans of 5.4 billion euros ($7.2 billion) to Greece, Italy, Portugal and Spain, which are all struggling with mounting debts, Spiegel said.  

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