Dexia Says Guarantee Agreement Submitted to EU for Approval
Stock Chart for Dexia SA (DEXB)
Dexia SA (DEXB), the bank being broken up after running out of short-term funding, said a draft agreement reached between Belgium, France and Luxembourg for temporary guarantees has been submitted to the European Commission.
Dexia, rescued by the governments in October for the second time in three years, obtained as much as 45 billion euros ($60.6 billion) in guarantees from the three states to cover its financing needs until the end of May, the Paris- and Brussels- based bank said in a statement today. The support, which reduces the firm’s dependence from central banks, will help the lender complete its planned asset sales, it said.
Dexia rose as much as 11 percent to 39 cents and was up 7.4 percent at 38 cents by 10:28 a.m. in Brussels trading, giving the bank a market value of 739 million euros. The stock has fallen 85 percent this year.
The temporary guarantee is “the first step” from the three governments to provide as much as 90 billion euros, Dexia said. Belgium is taking on 60.5 percent, France 36.5 percent and Luxembourg 3 percent. “It is an irrevocable, unconditional, direct, autonomous and first demand guarantee,” the company said.
Dexia, once the world’s largest municipal lender, said Nov. 9 its shareholder equity shrank 84 percent after the nationalization of its Belgian bank unit and declines in the value of government-bond holdings.
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