Dexia wants a sale agreed by end of July

Tim Wallace
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TROUBLED Franco-Belgian lender Dexia yesterday revealed it had called off talks to sell its asset management arm, and set a new deadline of 30 July to reach an agreement.

The nationalised bank said it terminated talks on 15 July and now wants to reach a deal by Tuesday.

It is trying to sell the unit to Hong Kong-based investor GCS Capital for around €380m (£327m).

If the sale goes through it will leave the bank with a portfolio of bonds and other assets which will take several years to run down.

The lender specialised in local government finance, but in the financial crisis had to be bailed out and then nationalised by the French and Belgian governments.

A report released this week by the French government estimates the state’s losses on its investment in the bank at €6.6bn so far.

And Dexia’s woes in lending to governments are still continuing.

The revelation came two days after the lender revealed it would take a €59m hit from Detroit’s bankruptcy.

Dexia has $305m (£199m) of exposure to instruments involved in the debt restructuring, but most of that is covered by insurers.