French-Belgian giant Dexia to be split into good and bad banks
FINANCIAL group Dexia will be split up with its "good" assets could be sold by the end of 2011.
The French-Belgian bank, which received a €6bn bailout in 2008, has come under increasing market pressure over its exposure to Greece debt.
Its board meeting went on into the early hours of today in an effort to resolve its problems.
Dexia financed a large portion of its long-term lending to public authorities with short-term borrowing, a business model which came under intense pressure when credit dried up in 2008.
The first phase of the break-up plan for the bank consists of new loans to French municipalities being separated and put into a newly created French bank, De Standaard , a Belgian daily, said today..
Healthy operations, such as Dexia's Turkish unit Denizbank, Dexia Asset management and its Canadian joint venture will be sold separately.
Dexia Bank Belgium could also be sold by the end of 2011.
Operations such as Dexia Credit Local, Italian Crediop and Spanish Sabadell would be put into a "bad bank", which would receive a guarantee from Belgium and France.
Dexia held €3.8bn of Greek sovereign bonds at the end of June and had a credit risk exposure to the country of €4.8 bn.