Dexia bank gets massive bailout Skip to main content

Dexia bank gets massive bailout

Dexia bank Dexia shares have fallen 42% in the last week

Related Stories

France, Belgium and Luxembourg are to bail out the troubled bank Dexia, following fears it could go bankrupt.

The Belgian government will buy the bank's division in Belgium for 4bn euros ($5.4bn; £3.4bn).

And Luxembourg's finance minister said a Qatari investment group was ready to buy the bank's Luxembourg unit.

The plan came after German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed Europe's crisis-hit banks needed to be recapitalised.

Dexia also secured state guarantees of up to 90bn euros to secure borrowing over the next 10 years. Belgium will provide 60.5% of these guarantees, France 36.5% and Luxembourg 3%, the bank said in a statement.

Belgian Prime Minister Yves Leterme told a news conference in the early hours of Monday: "We found an agreement on the fair division of the costs related to the management of the 'rest bank'."

The Belgian unit is a largely retail operation of 6,000 staff, handling deposits totalling 80bn euros for four million customers.

Dexia asked for help for the second time in three years after a liquidity squeeze sent its shares tumbling.

“Start Quote

The near collapse of the Franco-Belgian bank Dexia is the event that focused the minds of eurozone leaders on the urgency of putting in place a comprehensive plan to strengthen European banks in general”
image of Robert Peston Robert Peston Business editor, BBC News
It had to be bailed out in 2008, with the Belgian, French and Luxembourg governments putting in 6.4bn euros to keep it afloat. 

Marathon talks
 
The latest announcement came after a board meeting that lasted some 14 hours from mid-afternoon on Sunday.

Dexia's near-collapse is the latest warning sign over the health of Europe's lenders. It has a global credit risk exposure of around $700bn, twice the gross domestic product of Greece.
BBC business editor Robert Peston said that given the size of Dexia, with a balance sheet of over 500bn euros, eurozone governments viewed its rescue as vital to avoid more market turmoil.

Under the plan, Dexia's French municipal finance operations will come under state control. The bank is also expected to announce the planned sale of its healthy businesses, such as Denizbank in Turkey.

The burden of bailing out Dexia led to a warning from the ratings agency Moody's that it could cut its rating on Belgium's government bonds.

Qatari purchases
 
Earlier on Monday, Belgian bank KBC said it was selling its Luxembourg unit, KBL European Private Bankers, to Qatari investment group Precision Capital for 1.05bn euros.

KBC said the sale would allow it to raise capital, reduce its risk profile and focus on its core markets of Belgium and central and eastern Europe.

Luxembourg Finance Minister Luc Frieden said the same investment group, which belongs to members of the Qatari royal family, was ready to buy Dexia's Luxembourg unit, BIL.

"The KBC Group has informed [us] that it has sold KBL to an investor from Qatar... The fact that this family group has bought one entity (KBL) and intends to buy the other (BIL) is good for the Luxembourg financial sector," he told a news conference.

The Luxembourg government itself still aimed to take a minority stake in BIL, though the size of the investment had not yet been agreed, he said.

http://www.bbc.co.uk/news/business-15235915
Labels:

Comments

Post a Comment

Popular posts from this blog

Chronology of the Press in Burma

1836 – 1846 * During this period the first English-language newspaper was launched under British-ruled Tenasserim, southern  Burma . The first ethnic Karen-language and Burmese-language newspapers also appear in this period.     March 3, 1836 —The first English-language newspaper,  The Maulmain Chronicle , appears in the city of Moulmein in British-ruled Tenasserim. The paper, first published by a British official named E.A. Blundell, continued up until the 1950s. September 1842 —Tavoy’s  Hsa-tu-gaw  (the  Morning Star ), a monthly publication in the Karen-language of  Sgaw ,  is established by the Baptist mission. It is the first ethnic language newspaper. Circulation reached about three hundred until its publication ceased in 1849. January 1843 —The Baptist mission publishes a monthly newspaper, the Christian  Dhamma  Thadinsa  (the  Religious Herald ), in Moulmein. Supposedly the first Burmese-language newspaper, it continued up until the first year of the second Angl
Post a Comment
Read more

ARSA claims ambush on Myanmar security forces

Arakan Rohingya Salvation Army (ARSA) on Sunday claimed responsibility for an ambush on Myanmar security forces that left several wounded in northern Rakhine state, the first attack in weeks in a region gutted by violence. Rakhine was plunged into turmoil last August, when a series of ARSA raids prompted a military backlash so brutal the UN says it likely amounts to ethnic cleansing of the Muslim Rohingya minority. The army campaign sent some 650,000 Rohingya fleeing for Bangladesh, where refugees have given harrowing accounts of rape, murder and arson at the hands of security forces and vigilantes. Myanmar's military, which tightly controls information about Rakhine, denies any abuses and insists the crackdown was a proportionate response to crush the "terrorist" threat. ARSA have launched few attacks in recent months.  But the army reported that "about ten" Rohingya terrorists ambushed a car with hand-made mines and gunfire on Friday morning
Post a Comment
Read more

Thai penis whitening trend raises eyebrows

Image copyright LELUXHOSPITAL Image caption Authorities warn the procedure could be quite painful A supposed trend of penis whitening has captivated Thailand in recent days and left it asking if the country's beauty industry is taking things too far. Skin whitening is nothing new in many Asian countries, where darker skin is often associated with outdoor labour, therefore, being poorer. But even so, when a clip of a clinic's latest intriguing procedure was posted online, it quickly went viral. Thailand's health ministry has since issued a warning over the procedure. The BBC Thai service spoke to one patient who had undergone the treatment, who told them: "I wanted to feel more confident in my swimming briefs". The 30-year-old said his first session of several was two months ago, and he had since seen a definite change in the shade. 'What for?' The original Facebook post from the clinic offering the treatment, which uses lasers to break do
1 comment
Read more