Belgium

Trading in Dexia's stock was suspended Thursday as governments and the bank's management scrambled to figure out what to do with the Franco-Belgian lender, The Wall Street Journal reported. It has been clear for days that the bank would have to be broken up, given its heavy exposure to Greek and Italian sovereign debt—a factor that has made other financial institutions wary of lending to Dexia. But details of the plan have yet to be agreed upon.

France and Belgium rushed to the aid of Dexia SA on Tuesday, in what will be the first state rescue of a European bank in the euro zone sovereign debt crisis, Reuters reported. The lender to hundreds of French and Belgian towns, which also needed propping up after the 2008 financial crisis, will see its French municipal finance arm broken off and put under the ownership of French state banks.

Belgium and its financial institutions aren’t having the easiest summer. There’s been no federal government since elections in June 2010 and coalition negotiations continue tackling the thorny issues, The Wall Street Journal The Source blog reported. The Bel-20 index, like most European bourses, has taken a pounding—leaving bank Dexia down 51% from 12 months ago; peer KBC down 44% and insurer Ageas down 37%.

France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but they failed to convince other regulators to go along with a European Union-wide prohibition, the Financial Times reported. The bans on the controversial practice where investors aim to profit from price falls will take effect on Friday morning. But other main markets, including the US and the UK, have said they have no plans to follow suit.

KBC NV is mulling changes to its restructuring plan, but it is too early to give a date for repaying state aid, the Belgian bank said Wednesday, Dow Jones reported. "KBC confirms that, as good business practice and as a reflection of sound management, it is currently pro-actively examining what the added value of certain changes to its strategic plan could be," the bank said in an emailed statement.

SAirGroup (formerly Swissair) was responsible for the bankruptcy of Sabena in November 2001, a Belgian court ruled, although it ordered a much lower payment than the claimants had sought, ATWOnline reported. It said the Swiss group, which held a 49.5% stake in the Belgian flag carrier, did not respect an August 2001 agreement to provide 60% of a €430 million ($589.4 million) cash injection needed to keep Sabena in business. The court ordered SAirGroup to pay Sabena’s creditors, its liquidator and the Belgian state €18.3 million in provisional damages.

The founders of Lernout & Hauspie Speech Products NV, once a global leader in speech-recognition technology, were found guilty by a Belgian court of fraud violations in the accounting scandal that led to the company's downfall a decade ago, Dow Jones Daily Bankruptcy Review reported. Jo Lernout and Pol Hauspie were each given sentences of five years, of which they were expected to serve three, a court spokesman said. Six other defendants in the case, including L&H's former chief executive, were also convicted.

Truvo Group's unsecured creditors say the European directory publisher's proposed plan to hand control of the company to its senior lenders is a "sham," Dow Jones Daily Bankruptcy Review reported. In papers filed Thursday with the U.S. Bankruptcy Court in Manhattan, the creditors allege that the Chapter 11 filing by Truvo USA and four other holding companies at the top of Truvo Group's corporate structure is a scheme to sever unsecured bondholders' liens against the company's operating assets and push through a debt-for-equity swap with secured lenders.

The European Commission Thursday cleared the €1.5 billion recapitalization given by Belgium to the insurance company Ethias for the company's restructuring, Dow Jones reported. The Commission concluded that Ethias' restructuring plan will restore the company's viability, without distorting competition due to the state support. In order to participate in the costs of the restructuring, Ethias will sell or wind down its retail life insurance business and a number of other assets, the Commission said. The insurer ran into severe difficulties in 2008 in the wake of the financial crisis.

Nationalised Dutch bank ABN Amro forecast more than €1 billion in second-quarter charges today, offsetting profitable results from both its units in the first quarter, The Irish Times reported. The Dutch government nationalised the local operations of former Belgian concern Fortis in October 2008, including both banks, amid a liquidity crisis. It has spent more than €26 billion on the nationalisation and subsequent support, making it one of the world's costliest rescues due to the credit crisis.