Dexia Takes 3.6 Billion-Euro Charge on Asset Sales
Dexia Takes 3.6 Billion-Euro Charge
Jock Fistick/Bloomberg
Dexia SA, the French-Belgian bank that’s forced to shrink its balance sheet by 35 percent by 2014, said it will take a charge of 3.6 billion euros ($5.1 billion) for the anticipated sale of mostly U.S. residential mortgage-backed securities and long-term bond disposals.
Dexia SA, the French-Belgian bank that’s forced to shrink its balance sheet by 35 percent by 2014, said it will take a charge of 3.6 billion euros ($5.1 billion) for the anticipated sale of mostly U.S. residential mortgage-backed securities and long-term bond disposals. Photographer: Jock Fistick/Bloomberg
Dexia to Take 3.6 Billion-Euro Charge
Jock Fistick/Bloomberg
The Dexia SA headquarters are seen in Brussels, Belgium. The second-quarter provision to cover future losses will reduce Dexia’s Tier 1 ratio, a measure of the bank’s ability to absorb losses, to about 11 percent from 13.4 percent at the end of March, the bank, based in Brussels and Paris, said today in an e-mailed statement
The Dexia SA headquarters are seen in Brussels, Belgium. The second-quarter provision to cover future losses will reduce Dexia’s Tier 1 ratio, a measure of the bank’s ability to absorb losses, to about 11 percent from 13.4 percent at the end of March, the bank, based in Brussels and Paris, said today in an e-mailed statement Photographer: Jock Fistick/Bloomberg
Dexia SA (DEXB), the French-Belgian bank forced to shrink its balance sheet by 35 percent by 2014, said it will take a charge of 3.6 billion euros ($5.1 billion) for the anticipated sale of mostly U.S. residential mortgage-backed securities and long-term bond disposals.
The second-quarter provision to cover future losses will reduce Dexia’s Tier 1 ratio, a measure of the bank’s ability to absorb losses, to about 11 percent from 13.4 percent at the end of March, the bank, based in Brussels and Paris, said today in an e-mailed statement. That ratio will increase to at least 12 percent by the end of this year, Dexia said.
Dexia is using the surplus capital accumulated over the past two years to accelerate the reduction of its balance sheet, which had slipped behind the targets agreed with the European Commission, and cut risks linked to the evolution of the U.S. housing market. The bank anticipates it will sell the asset- backed securities in the FSA Financial Products portfolio and most of the bonds before June 2012, reducing its need for short- term funding by an additional 20 billion euros.
“The provision is split evenly over the FSA portfolio and the bond portfolio,” Chief Executive Officer Pierre Mariani said on a conference call with reporters today. “This provision will give us more visibility on future profits.”
By writing down the U.S. asset-backed securities to their market value, Dexia said it will be in a position to waive the Belgian and French state guarantees covering losses on those assets and renegotiate the terms and consequences arising from the state support.
To contact the reporter on this story: John Martens in Brussels at jmartens1@bloomberg.net
To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net
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