Bailed-out financial group Dexia cleared the way for its full dismantlement on Thursday, with final board clearance for the nationalization of its Belgian banking business and details of the sale of its French public financing arm.
Dexia was rescued by France, Belgium and Luxembourg this month, receiving €90-billion ($124 billion) of state guarantees and accepting that Belgium would take over its operations there for €4-billion.
Dexia said French state bank Caisse des Depots and La Banque Postale, France’s post office bank, would take stakes of 65 per cent and 5 per cent respectively in its French public financing arm, Dexia Municipal Agency.
Chief Executive Pierre Mariani told French business daily Les Echos the takeover price was €380-million.
Caisse des Depots and La Banque Postale would also set up a 65:35 joint venture to provide loans to French local authorities, refinanced through Dexia Municipal Agency.
The group said it had also started processes to dispose of its 50 per cent share in a joint venture with Royal Bank of Canada - RBC Dexia Investor Services - as well as Dexia Asset Management and its fast-growing Turkish operation, DenizBank.
Mr. Mariani told Les Echos at least four credible buyers had expressed interest.
Qatar National Bank, the Gulf state’s largest lender, is eyeing DenizBank in a deal potentially worth up to $6-billion.
Another Qatari investment group, belonging to members of the al-Thani royal family, is set to take over Dexia’s Banque Internationale Luxembourg, in a deal Luxembourg’s finance minister Luc Frieden said was expected to be finalized this month.
Dirk Peeters, analyst at KBC Securities, said the cherry-picking of Dexia was continuing and that this would eventually lead to its conversion into a fixed-income hedge fund.
Dexia said its bonds portfolio in run-off totalled €75.5-billion, some €20-billion lower than at the end of June, and that it now held €12.2-billion of sovereign debt from Greece, Italy, Ireland, Portugal and Spain, from €20.9-billion before.
Its Greek holding had fallen to €2.1-billion from €3.8-billion.
Mr. Mariani said the debt portfolio should shrink to €40-50 billion by mid-2013.
Dexia said the disposal of its Belgian arm would reduce the size of its balance sheet by €144-billion euros and that it would use the proceeds to repay loans from Dexia Bank Belgium.
The agreement with Caisse de Depots and La Banque Postale would subtract a further €65-billion from the balance sheet, which totalled €518-billion at the end of June.
As well as its bond portfolio, Dexia would also retain public financing units Crediop of Italy, Sabadell of Spain, a similar business in Germany and some French operations.