Dexia has announced a second year of heavy losses – 2.9 billion euros and said there will be more to come this year.
The nationalised Franco-Belgian lender sold off much of its businesses in 2012 and also suffered higher funding costs and asset writedowns.
Those losses are a problem for the governments of France, Belgium and, to a lesser extent, Luxembourg which guaranteeing Dexia’s borrowings. That could derail efforts to rein in their budget deficits.
In November Dexia reached an agreement with France and Belgium to cap those guarantees at 85 billion euros. At that time the two countries pumped 5.5 billion euros into the group in its third bailout in four years.