Dexia Moves Further Into State Hands

Published in

France and Belgium Thursday agreed to inject a further €5.5 billion ($7 billion) into Dexia SA, putting one of the first European banking casualties of the 2008 financial crisis almost entirely in state hands and adding to the burden of cutting government debt and deficits amid the euro-zone recession, The Wall Street Journal reported. France agreed in the wee hours of the European morning to provide €2.59 billion and Belgium €2.92 billion in exchange for preference shares. The recapitalization will leave only around 6% of the Dexia shares publicly owned and available for trading, said Chief Executive Karel De Boeck. That compares with about some 30% in December. In addition to the national governments, Belgian regions and France's state-owned Caisse des Depots et Consignations also hold stakes in Dexia. It is the third bailout of Dexia in four years, and comes as the bank reported a €1.23 billion net loss for the third quarter stemming from higher funding costs and a sharp fall in lending revenue. Dexia didn't provide earnings figures in the third quarter of 2011. Belgium's finance ministry said the governments "must primarily and principally benefit" from any future dividends the firm pays. Read more. (Subscription required.)