Dexia Gets €90B in Aid Commitments, Will Set Up 'Bad Bank'
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Following negotiations and rumors, Dexia has finally found its knight in shining armor.
According to reports Monday, the Belgium government will buy the local consumer-lending unit of Dexia for about €4 billion ($5.4 billion) and guarantee 60 percent of a bad bank which will house Dexia's troubled assets. The announcement was made by Belgian Finance Minister Didier Reynders.
Recent debt issues in the Eurozone caused Dexia's short-term financing to evaporate.
Dexia will receive €90 billion of interbank and bond funding for 10 years; Belgium will be providing 61 percent of the financing, France will provide about 37 percent and Luxembourg about 3 percent of the backing.
Dexia is also looking to off it's Banque Internationale unit, currently valued at about €1.7 billion. According to a statement from the bank, "Dexia’s board instructed Chief Executive Officer Pierre Mariani to enter into exclusive talks with Caisse des Depots et Consignations and La Banque Postale for an agreement on the financing of French local authorities and support for Dexia Municipal Agency from CDC."
After resuming trade down more than 30 percent, Dexia shares pared losses sharply and are now down just 4.7 percent.
According to reports Monday, the Belgium government will buy the local consumer-lending unit of Dexia for about €4 billion ($5.4 billion) and guarantee 60 percent of a bad bank which will house Dexia's troubled assets. The announcement was made by Belgian Finance Minister Didier Reynders.
Recent debt issues in the Eurozone caused Dexia's short-term financing to evaporate.
Dexia will receive €90 billion of interbank and bond funding for 10 years; Belgium will be providing 61 percent of the financing, France will provide about 37 percent and Luxembourg about 3 percent of the backing.
Dexia is also looking to off it's Banque Internationale unit, currently valued at about €1.7 billion. According to a statement from the bank, "Dexia’s board instructed Chief Executive Officer Pierre Mariani to enter into exclusive talks with Caisse des Depots et Consignations and La Banque Postale for an agreement on the financing of French local authorities and support for Dexia Municipal Agency from CDC."
After resuming trade down more than 30 percent, Dexia shares pared losses sharply and are now down just 4.7 percent.
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