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The Dexia logo is seen on the top of a building from the Dexia bank headquarters in Brussels AP Photo/Virginia Mayo

Belgium to take control of part of Dexia bank

The Belgian state will buy the national subsidiary of Dexia for €4 billion. Dexia is the first banking victim of a new squeeze in European credit markets.

BELGIUM IS TO take control of the Franco-Belgian bank Dexia, it has been confirmed.

The Belgian state will buy the national subsidiary of Dexia for €4 billion and provide tens of billions of euro in new guarantees as part of a wider bailout of the lender, the first banking victim of a new squeeze in European credit markets.

The part-nationalisation of Franco-Belgian Dexia was triggered by other banks’ increasing reluctance to lend to it.

This was due to its exposure to highly indebted eurozone states like Greece and Italy and to struggling municipalities in the United States.

Belgium’s caretaker prime minister Yves Leterme said the nationalisation was necessary to insulate the Belgian retail bank from the risks of the wider group, Dexia SA.

He said support from the state ensures that all of Dexia’s clients “can be sure and certain that their money is in full security.”

On top of the nationalisation, the governments of Belgium, France and Luxembourg together will provide an additional €90 billion in funding guarantees for the bank for up to 10 years.

Belgium will provide 60.5 per cent of these guarantees, 36.5 per cent will come from France and the remaining 3 per cent from Luxembourg.

At the same time, Dexia’s board is in negotiations with French banks Caisse des Depots et Consignations and La Banque Postale to find a solution to the financing of French local authorities, in which Dexia plays an important role.

The announcement followed marathon negotiations between the three governments and the bank’s management.

Officials were worried that a collapse of the bank would exacerbate an already tight funding environment for banks in Europe, as analysts warn of a credit crunch similar to the one that followed the collapse of Lehman Brothers.

To avert such a scenario, European leaders are now pushing banks to shore up their capital cushions.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said yesterday that they were working on a coordinated plan to recapitalise European banks that would be completed by the end of the month.

Greece, meanwhile, said today that it had to rescue local lender Proton Bank.

The Belgian and French governments were concerned that a bailout would threaten their credit rating and drive up interest rates on their bonds.

On Friday, Moody’s Investors Service placed Belgium’s Aa1 rating on review for a possible downgrade, due in part to the expected expense of guaranteeing that Dexia’s depositors will lose no money.

Belgian finance minister Didier Reynders said that the bailout would lift the country’s debt from around 97 per cent of economic output to about 98 per cent.

The French government, too, was under acute pressure to save Dexia as the bank is one of the country’s largest lenders to towns and cities.

France and Belgium already became part owners of the bank during a €6.4 billion bailout in 2008.

Last week Dexia announced it was in negotiations with a group of international investors interested in buying its Luxembourg subsidiary.

At a news conference today, the bank’s management blamed the renewed problems on the risks that were piled up before they took over in 2008.

“We realized very quickly that we found ourselves in front of a very difficult mission,” said Chairman Jean-Luc Dehaene.

Efforts to strip down Dexia’s balance sheet and shift funding from short-term to long-term were taken quickly, but management did not have enough time to get the lender back on track before it was slapped hard by the government debt crisis, Dehaene added.

The chairman insisted that Dexia faces a crisis of liquidity, not solvency — meaning it is not bankrupt, but just doesn’t have the ready cash it needs in the short-term.

That is why the bank managed to pass pan-European stress tests just this summer, Dehaene said.

Dexia’s stock remained suspended Monday morning following steep losses early last week.

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4 Comments
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    Mute Larry Whack
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    Feb 12th 2016, 10:26 PM

    A dose of thumps would do that lad no harm.

    186
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    Mute Shane McGettrick
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    Feb 12th 2016, 11:27 PM

    Douchebaggery. God be with the times when this stuff would see you labelled a bol*x, not an internet sensation.

    123
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    Mute Jamie McCormack
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    Feb 13th 2016, 1:41 AM

    haha you guys.

    5
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    Mute Uncle Denise
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    Feb 12th 2016, 9:26 PM

    How is this news? I want interesting news not crap like this!!!

    129
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    Mute Tomás O'Loughlin
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    Feb 12th 2016, 9:28 PM

    It’s the Daily Edge. Want news, read a newspaper. DE is for entertainment/switching off from too much news.

    48
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    Mute Johnneary
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    Feb 12th 2016, 10:24 PM

    I find the title of this article is a tad bit disingenuous.
    Real men don’t do these things.

    25
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    Mute Byyys
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    Feb 12th 2016, 9:26 PM

    A whooping 82,742 Views… I guess from a journalist point of view this has gone “viral”?

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    Mute Your Defence
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    Feb 12th 2016, 9:58 PM

    1.2 million on YouTube, only been up a day.

    35
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    Mute Eoin Milner
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    Feb 12th 2016, 10:29 PM

    Shared….

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    Mute Eoin Milner
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    Feb 12th 2016, 10:29 PM

    Like it matters anyway….

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    Mute Notthatguy
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    Feb 13th 2016, 12:42 AM

    Ya make money from hits….. This guy had a plan, and it seems to be working, so fair play, ignore what many Irish are famous for, begrudgers……

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    Mute bacoxy
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    Feb 12th 2016, 9:26 PM

    She has set a good eggsample to other mothers

    53
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    Mute Jonny Irish
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    Feb 12th 2016, 11:51 PM

    You’re some yolk!

    24
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    Mute Noel Tate
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    Feb 13th 2016, 11:33 AM

    That pun doesn’t egg-wash with me.

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    Mute Suzie Sunshine
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    Feb 12th 2016, 9:56 PM

    I wouldn’t dare throw an egg at my mammy , it’s so disrespectful .. Plus the fact that l would be more afraid of what gets thrown back at me !

    41
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    Mute john truman
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    Feb 12th 2016, 10:18 PM

    I would throw him out of the house

    26
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    Mute Luke Sarpish
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    Feb 12th 2016, 9:28 PM

    Jackass was doing this stuff 15 years ago.Have no idea why there is an article on this. Is he going to become a drug addict and kill himself in a car crash too?.

    25
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    Mute family guy
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    Feb 12th 2016, 10:15 PM

    Luke the kids of today don’t recall jackass. It’s all new to them.

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    Mute Dave Meagher
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    Feb 13th 2016, 12:14 AM

    Right that’s it, I want to leave this planet.

    18
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    Mute baz newham
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    Feb 12th 2016, 11:16 PM

    Like throwing eggs at your mother !…..like who gives a f&&k!

    15
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    Mute Cill Dará Abú
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    Feb 12th 2016, 11:22 PM

    Oh big man, throwing eggs and his mum. Has he no mates to this sort of idiotic prank on

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    Mute zebedee
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    Feb 12th 2016, 9:31 PM

    I do eggsactly the same to my mam each day….but my mam’s better. If she lets the egg fall its scrambled for breakfast….if she catches, it’s boiled or fried sunny side up.

    12
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    Mute John Fergus
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    Feb 12th 2016, 11:18 PM

    well presumably the video is monetized and some people will subscribe to his channel after seeing this video. this could be a very good money spinner for him, hopefully he will deal in his long suffering mother………….otherwise he’s a c##t.

    8
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    Mute fitzz30
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    Feb 13th 2016, 12:06 AM

    Wow that guy is amazing. He should get his own tv show with a prime time slot.

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    Mute Zandranalily
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    Feb 13th 2016, 3:10 AM

    She should try throwing a few back.

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    Mute John Doe
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    Feb 12th 2016, 10:56 PM

    Mad yoke..

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    Mute Malcolm Lackey
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    Feb 13th 2016, 12:40 PM

    I like the way no one is taking responsibility for putting this tripe up!! No one wants to see a poor oul one getting egged, why yas even giving this sap publicity?

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    Mute ginger tomcat
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    Feb 13th 2016, 11:34 AM

    What would be nice is if a few people return favour to him at unexpected points throughout next year

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    Mute Lilly Ella
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    Feb 13th 2016, 8:07 AM

    I think it’s great craic…….as long as he does the cleaning up after an egg breaks.

    1
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