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Dexia to Set Up ‘Bad Bank’ With France, Belgium Guarantees

Dexia SA, Belgium’s biggest bank, plans to pool its troubled assets into a “bad bank” with Belgian and French government guarantees to protect depositors and its municipal-lending business.

The Belgian-French lender bailed out by the two governments in 2008 will put its “legacy” division, which held 113 billion euros ($150 billion) of assets at the end of June, into the bad bank, Belgian Prime Minister Yves Leterme told reporters in Brussels yesterday. Finance Minister Didier Reynders said details of the plan will be released after talks with partners.