Dexia says governments may step in after its shares plunge

THE BOARD of struggling Franco-Belgian bank Dexia last night said it will work with governments to “resolve the structural problems penalising the group’s operational activities”.

The board held an emergency meeting last night to discuss options for the bank after Moody’s said it was on review for a credit rating downgrade, claiming that its funding position has worsened since the summer.

Shares in the lender plunged as much as 14 per cent during the day.

Dexia said in a statement late last night that the ongoing turbulence in the Eurozone and in particular the interbank loans market meant its non-core assets were affecting the bank’s structural position.

“The states shareholders have confirmed their will to support Dexia Group, so that it can implement the various measures in an orderly manner and under the best conditions,” the board said.

The options for the bank could include a break-up, which would see a chunk of non-core assets sold off more quickly than previously planned, or even a government rescue.

It is thought that Belgium is working on a bailout plan alongside France and Luxembourg. The three governments injected €6.4bn (£5.5bn) in capital to save the bank during 2008.