Belgium buys Dexia bank in rescue effort

Belgium's government said it would buy struggling bank Dexia and separate it into good and bad banks to isolate its exposure to Greek debt. The EUobserver said Monday the bank's board of directors agreed to break up the bank after a 14-hour meeting Sunday. The government said it would guarantee 60 percent of the bad assets, which reduces the bank's need to raise nearly $20 billion in fresh capital. In total, Dexia has a credit risk exposure of more than $682.6 billion. The bank holds $28.6 billion in bonds from Greece, Italy, Spain, Portugal and Ireland, the five eurozone country's with the most immediate financial difficulties. Credit ratings firm Moody's Investors Services last week said Belgium's Aa1 rating was at risk of a downgrade if the country took over Dexia. "It is unclear how far additional support measures would be likely to weigh on the balance sheet of the government," Moody's said in a statement.