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Dexia rescue underway

Dexia rescue underway
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As a rescue plan comes together for struggling Belgian-French bank Dexia, some worried depositors have been withdrawing their money and its customer helpline has been overwhelmed with calls.

The French and Belgian governments are racing to stop the bank’s troubles from worsening the euro zone debt crisis.

The head of the French central bank, Christian Noyer, explained: “We will ensure that there is enough liquidity, as we say in financial jargon. That means the Belgian National Bank and the Bank of France will lend Dexia as much money as is needed to ensure the restructuring process goes smoothly.”

Belgian and French state financial institutions own nearly 48 percent of Dexia which they ended up with when it has to be rescued following the 2008 financial crisis.

It had to be saved then – as now – because it is a lender to thousands of French and Belgium local councils.

The part of the bank that has made those loans will be combined with other French state owned banks.

The loans it has made to the Greek government – which are unlikely to be paid back in full – will be shifted to a so-called ‘bad bank’ with taxpayers, again, picking up the tab.

Even though there are government guarantees of up to 100,000 euros per account holder, Belgian newspaper De Tijd reported customers had gone into

Belgian branches to withdraw 300 million euros from Dexia accounts. This excluded online transactions. Dexia in Belgium holds some 80 billion euros of deposits.