Belgium to buy troubled Dexia subsidiary for €4bn
Dexia bank has said its Belgian subsidiary will be bought by the state for €4bn (£3.5bn) as part of a restructuring of the bank amid a severe liquidity squeeze.
Dexia is the first large European bank to need a state bailout since the financial crisis of 2008, after it came under intense funding pressure due to its exposure to highly indebted eurozone states like Greece, Italy and Spain.
On top of the nationalisation, the governments of Belgium, France and Luxembourg will provide an additional €90bn (£77.7bn) in funding guarantees for the bank for up to 10 years.
Belgium will provide 60.5% of these guarantees, 36.5% will come from France and the remaining 3% from Luxembourg.
At the same time, Dexia's board is in negotiations with French banks Caisse des Depots et Consignations and La Banque Postale to find a solution to the financing of French local authorities, in which Dexia played an important role. Dexia said backing from the Caisse des Depots would reduce its short-term funding requirement by €10bn (£8.6bn).
Belgium's caretaker prime minister Yves Leterme said that the support from the state offers security to all of Dexia's clients.