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Dexia bank

Published on October 14, 2011
Reply by François Fillon, Prime Minister, to a question in the National Assembly (excerpts)

Paris, October 11 , 2011


This is a serious matter that concerns, first of all, tens of thousands of Belgian depositors who are worried – or rather, who were worried until the agreement reached on Sunday – for their savings. It’s also a serious matter for a large number of Luxembourg depositors, because there’s a Luxembourg subsidiary which is also a retail bank. Finally, it’s a serious matter for local authorities, particularly in our country, which have borrowed a lot from Dexia and are worried about which specialized financial establishment will be able to finance their investments tomorrow.

So we must resolve the problems facing Dexia. To that end, the first thing we must avoid is accusations made against the different people involved, so before I explain to you what we’re going to do with Dexia I want to refresh everyone’s memory, because many governments bear some responsibility for the downward slide which the local authorities’ bank is currently experiencing.

The creation of Dexia’s precursor dates back to a decision in 1987 by a right-wing government. But it was in 1991, when Michel Rocard was Prime Minister, that the decision was taken to put the bank on the financial market. A decision in 1996 then led to the Crédit Communal de Belgique and the Crédit Local de France being merged to create Dexia. But in 1999, under the government of Lionel Jospin, this bank was listed on the market, on the Brussels and Paris stock exchanges. Finally, it was in 2000 that the most serious decision was taken, the one that brought about Dexia’s most serious difficulties: the acquisition of an American monoline. I remember that at each of these stages, officials represented the state, sat on the bank’s board of directors and thus made governments responsible [for the decisions taken]. So it’s pointless to play the blame game: everyone let Dexia go adrift, and the main act of privatization was indeed the floating of the bank’s shares on the market, in 1991.

What are we going to do with Dexia? On Sunday we negotiated with the Belgian and Luxembourg governments the following agreement, which was accepted by the bank’s shareholders. The Belgian government is going to purchase the Belgian retail bank – which will also remain quoted on the stock exchange – for €4 billion. The Luxembourg bank will also be purchased; discussions are under way with several possible buyers. The stocks of loans to local authorities in France will be backed by the Caisse des Dépots et Consignations, which will be responsible for them and manage them, with a guarantee mechanism aimed, of course, at protecting the Caisse des Dépots and to be submitted to Parliament in the coming days. It will remain a residual bank, with commitments of €90 billion that will continue to be managed by Dexia and will be subject to a loan guarantee, two thirds of which will be provided by the Belgian government and one third by the French government, with a tiny bit coming from the Luxembourg government, given the weight it carries in the bank.

Finally, we decided to create a public bank that will be responsible for financing local authorities. So that’s the future. This bank will be backed by the Caisse des Dépots and La Banque Postale. It will be set up as quickly as possible, so that local authorities’ access to credit to finance their investments can be made secure. Without waiting for it to be created, we’ve decided to make €3 billion in loans available to local authorities by the end of the year, to be distributed by the Caisse des Dépots and financial institutions under the same conditions as in 2008, in such a way that the authorities’ access to credit isn’t interrupted.

It’s a difficult subject: we’re looking at a bank that’s been badly managed, that’s clearly been shaken by the financial crisis. We’re simply trying to provide responses to the problems raised./.

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