Dexia warns over survival as it falls €11.6bn into red
STRICKEN Franco-Belgian bank Dexia has warned it could go out of business after posting a net loss of €11.6bn (£9.8bn) for last year.
The lender has only received commitments for half the €90bn of state guarantees agreed in October and yesterday it said its survival as a “going concern” depends on the pledges from France, Belgium and Luxembourg, which allow it to borrow, and on its ability to pay for the guarantees. It also needs to win European Commission approval for its restructuring plan.
The “non-realisation” of one or more of these assumptions could hit liquidity or solvency, it said, and admitted its fate was out of its hands.
Shares in Dexia, a lender to thousands of French local authorities, tumbled 6.5 per cent to €0.29 after saying it was hit by its break-up and exposure to Greek debt and other toxic assets.
The bank said it suffered a €4bn loss due to the disposal of Dexia Bank Belgium and a further €1bn hit from the sale of French lending arm Dexia Municipal Agency.
It also booked a €3.4bn loss on its holding of Greek sovereign bonds, while the cost of an accelerated sale of low-grade US assets, carried out in the first half of the year, was €2.6bn. It will not pay a dividend.
Dexia, which is led by Pierre Mariani, a former aide to Nicolas Sarkozy, is being broken up following the nationalisation of its Belgian banking arm. The rump will become a “bad bank” holding little more than a bond portfolio.