Dexia to Sell Luxembourg Unit for $950M

Dexia SA (DEXB), the French-Belgian lender being broken up after running out of short-term funding, signed an agreement to sell its Luxembourg unit for 730 million euros ($950 million).

Precision Capital of Qatar will buy 90 percent of Dexia Banque Internationale à Luxembourg SA, Dexia said today in a statement. Luxembourg will pay 73 million euros of the overall price to acquire the remaining 10 percent.

“It’s a good deal for Dexia, a good deal for BIL and a good deal for Luxembourg,” Luxembourg Finance Minister Luc Frieden said in a telephone interview after the deal was announced. “This deal constitutes an important step in the strategic development of BIL’s national and international outlook and consolidates its systemic importance for the Luxembourg financial sector.”

Dexia, once the world’s largest municipal lender, is being dismantled after concern over European sovereign debt caused its short-term funding to evaporate. The lender sold its Belgian banking unit to that nation’s government and France’s Caisse des Depots & Consignations agreed to take control of the subsidiary that funds its French municipal-lending business.

Shares in Dexia fell as much as 4.2 percent in Brussels trading. The stock was down 1.5 percent at 33.1 cents at 10:07 a.m. local time.

Dexia Asset Management

Dexia BIL’s participation in Dexia Asset Management Luxembourg and RBC Dexia Investor Services Ltd. will be disposed of separately, according to the statement. The Luxembourg unit’s legacy securities and its stakes in Dexia LDG Banque and Parfipar will be transferred to Dexia before the closing of the transaction, said Dexia, which is based in Paris and Brussels.

Frieden said he expects regulatory approval by the European Union and Luxembourg in the next few weeks.

Dexia, rescued by Belgium, Luxembourg and France in October for the second time in three years, has obtained as much as 45 billion euros in guarantees from the three governments to cover its financing needs until the end of May, the bank said on Dec. 5. The support will help the lender complete its planned asset sales, it said.

To contact the reporters on this story: Vidya Root in Paris at vroot@bloomberg.net; Stephanie Bodoni in Brussels at sbodoni@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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