Live Currency Rates
 
  Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

France, Belgium to pump $ 7 billion into Dexia  Join our daily free Newsletter

MENAFN - Arab News - 10/11/2012

No. of Ratings : 0
Add to Mixx!


 


Chief risk officer of Dexia Bank Claude Piret, left, and Chairman of Dexia bank Karel de Boeck hold a press conference on Thursday at Dexia Office bulding in Brussels.
(MENAFN - Arab News) France and Belgium agreed to pump 5.5 billion euros ( 7 billion) into Dexia, the stricken lender the two states were forced to bail out a year ago, after it made another large loss and extensive writedowns.

The prospect of injecting more money into Dexia, which had already absorbed 6.4 billion euros in funds in 2008, threatens to undermine both countries' efforts to rein in their deficits at a time of intense scrutiny on euro zone budgets.

The move was announced shortly before Dexia released third-quarter earnings showing it had made a net loss of 1.23 billion euros, bringing the loss for the first nine months to 2.39 billion euros. It lost 11.6 billion euros in 2011.

Hours after the two countries bailed it out again, the head of the ailing bank said that it will take until 2099 to liquidate toxic assets at Dexia, and reported a huge third-quarter loss.

Administrator Karel De Boeck told a news conference that totally dismantling the bank, a process that began in October 2011, would last almost another century due to its holdings of toxic assets.

The group, rescued for a second time in three years last October, also had to pay fees of 725 million euros to the states for the guarantees, which cover Dexia's borrowings, in the first nine months of 2012.

Although the troubled bank has shed all of its subsidiaries, in September it remained saddled with a soured portfolio of bonds worth 69 billion euros which worse still had been bought on credit.

A forced sale of part or all of the assets before maturity would trigger "enormous" losses, he warned.

"A total and immediate liquidation of Dexia is not possible. It would cost a mad amount of money," De Boeck said. "We think it would be better not to deleverage and not to take losses because these losses can be avoided," he said.

In Paris, the bank reported a third-quarter net loss of 1.2 billion euros ( 1.53 billion) yesterday, blaming the cost of asset sales and financing state guarantees.

It said asset sales had generated big capital losses and left Dexia SA with negative shareholder funds, meaning its capital was all used up.

The two governments also agreed to change the way providing state guarantees to the bank is shared out but this is subject to approval by European Union competition authorities.

The deal also calls for a cut in the limit on state loan guarantees to 85 billion euros from 90 billion euros.

After what sources close to the matter described as "difficult" talks between Paris and Brussels, Belgium's share of the restructuring burden was reduced from 60.5 percent to 51.4 percent.

The lower rate means Belgium's liabilities are in effect cut by nearly 11 billion euros.

The overnight agreement was reached by Vanackere and his French counterpart Pierre Moscovici and has already been given the green light by key ministers in the Belgian cabinet, a statement from Brussels said.
Paris and Brussels were keen to find an accord before Dexia issued its quarterly results early on Thursday.

Dexia bank operated a retail business in Belgium but its core business was financing public bodies and local authorities in France and Belgium.

 






  MENA News Headlines


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help