Within the context of a global restructuring plan responding to the worsening of the sovereign debt crisis and to the pressures that it has caused on the interbank market, today the Board of Directors examined various measures in line with the decisions taken by the French, Belgian and Luxembourg states aimed at stabilising the Group's liquidity situation.
Today the Board of Directors:
- considered that in the current circumstances it was in the social interest of Dexia SA and its subsidiaries to accept the offer submitted from the Belgian state for the acquisition of 100% of the shares of Dexia SA in its subsidiary Dexia Bank Belgium, and instructed the Group management to handle the consequences of the disposal in the interests of its clients, staff members of the Group and shareholders;
- approved Dexia’s participation in the funding guarantee mechanism decided by the Belgian, French and Luxembourg states in the amount of maximum EUR 90 billion for Dexia SA and its subsidiary Dexia Crédit Local;
- instructed the CEO to enter into exclusive negotiations with the Caisse des Dépôts et Consignations and La Banque Postale with a view to the conclusion of an agreement relating to the French local public finance sector;
- was informed of the progress made in the exclusive discussions with the group of international investors, including the Luxembourg state, interested in the acquisition of Dexia Banque Internationale à Luxembourg, as announced on 6 October 2011.
Sale of Dexia Bank Belgium to the Belgian state
Considering the risks and the difficulties arising for Dexia Bank Belgium from the situation of the Dexia Group, and the systemic nature of Dexia Bank Belgium for the Belgian financial sector, the Belgian state has decided to offer to purchase Dexia’s holding in Dexia Bank Belgium. The Board of Directors of Dexia SA examined the offer made by the Belgian state which in particular includes the acquisition of Dexia SA’s entire holding in Dexia Bank Belgium and its subsidiaries, with the exception of Dexia Asset Management, for the sum of EUR 4 billion and an earn-out mechanism in favour of Dexia SA in the event of a potential resale within a deadline of five years.
The Board of Directors has analysed this offer and independent experts have been consulted. Aware of the social interest of the Group and also of its subsidiaries, it has approved the purchase of Dexia Bank Belgium by the Belgian state.
Based on the numbers on 30 June 2011, this transaction would have led to a EUR 55 billion decrease of the balance sheet and a EUR 42 billion reduction of the weighted risks. It would have resulted in a loss of around EUR 3.8 billion and a simultaneous decrease of the AFS reserve of EUR 2.2 billion.
This sale will be finalised in the very near future. It will enable the Dexia Group to reduce its shortterm funding requirement by more than EUR 14 billion, to improve the Group’s solvency by more than 200 basis points and to reduce its portfolio of non-strategic assets by EUR 18 billion.
This purchase will strengthen Dexia Bank Belgium in the interests of its clients and its staff members.
Considering the links which exist between Dexia Bank Belgium and the various entities of the Dexia Group, service agreements will be put in place very shortly to accompany this sale and to maintain operational continuity during the transitional phase.
State guarantee on the new funding issued by Dexia SA and its subsidiary Dexia Crédit Local
In order to implement the various phases of its restructuring plan, Dexia benefits from significant support from the Belgian, French and Luxembourg states which have undertaken to guarantee the Group's funding.
The Belgian, French and Luxembourg states have in fact decided jointly to guarantee the interbank and bond funding for a period of up to ten years raised by Dexia SA and its subsidiary Dexia Crédit Local, this guarantee being divided between the states as follows: 60.5% Belgium, 36.5% France and 3% Luxembourg.
The ceiling for this refinancing guarantee will be a maximum of EUR 90 billion. The term is ten years and this could be extended, if necessary, by new authorisations.
It will be subject to remuneration in accordance with European requirements. This remuneration will be communicated as soon as the protocol with the States is concluded.
The main terms of this guarantee have been accepted by the Board of Directors.
The implementation of this direct and autonomous guarantee, payable on first demand, will be validated in Belgium by Royal Decree deliberated on by the Council of Ministers, in France by a provision in the Finance Act and in Luxembourg by a Grand Ducal Regulation deliberated on in Council. As the states wish, the guarantee will be validated in the very near future and reassures depositors and creditors of the Group that Dexia will have sufficient liquidity.
Negotiating an agreement with Caisse des Dépôts et Consignations and La Banque Postale in relation to the financing of local authorities in France
The Board of Directors has instructed the CEO to enter into negotiations with Caisse des Dépôts et Consignations and La Banque Postale to conclude an agreement in relation to the financing of French local authorities, including the backing of Dexia Municipal Agency by Caisse des Dépôts et Consignations.
This backing operation would enable Dexia Municipal Agency to benefit from the support of Caisse des Dépôts et Consignations and would reduce Dexia’s short-term funding requirement by almost EUR 10 billion.
The Board of Directors has asked the Group management to submit a precise and completed plan to it in coming weeks.
Confirmation of exclusive negotiations with a view to the disposal of Dexia Banque Internationale à Luxembourg
The Board of directors confirms the continuation of negotiations on an exclusive basis with a view to the disposal of Dexia Banque Internationale à Luxembourg to a group of international investors with the participation of the Grand Duchy of Luxembourg. A binding offer will be submitted at the end of the two-week exclusivity period beginning on 10 October.
The implementation of these measures will respect social dialogue and the interests of staff members. The three states will be attentive to the fact that the rights and interests of employees of the Group and its subsidiaries are protected. Members of staff of the holding company Dexia SA will be offered the opportunity to join the main subsidiaries of Dexia SA, namely Dexia Crédit Local, Dexia Bank Belgium and Dexia Banque Internationale à Luxembourg, depending on their respective location.
DexiaDate: 10.10.2011