Dexia gets a new capital boost from French and Belgian states

THE FRENCH and Belgian governments agreed to pump billions more into bailed-out bank Dexia yesterday, after a year of wrangling with the European Commission over how best to manage the lender.

The states also arranged an €85bn (£67.8bn) liquidity guarantee, on top of the €5.5bn capital hike.

Belgium will put in 53 per cent of the aid, with France providing the rest. That represents a shift from the original even split, costing the Belgian government an extra €165m on the initial plan.

But the government is thought to be pleased with the deal, with its share of the guarantee being €10bn smaller than initially envisaged.

The latest credit injection came as the group’s net asset position turned negative as the value of a French unit tumbled.

The announcement came as the bank reported a third-quarter loss of €1.23bn, largely due to bad loans, the writedown on asset sales.

The deal was in part arranged by UBS, Belgium’s sole advisor.

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