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France and Belgium reach deal on Dexia

France, Belgium and Luxembourg reached a deal to dismantle Dexia on Sunday. The troubled bank was the first victim of the eurozone debt crisis.

Germany's Angela Merkel and France's Nicolas Sarkozy met on Sunday in Berlin
Germany's Angela Merkel and France's Nicolas Sarkozy met on Sunday in Berlin Reuters
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French and Belgian prime ministers, François Fillon and Yves Leterme, met in Brussels over lunchtime to finalise the deal.

The Dexia shareholders needed to agree on the sale price of Dexia shares, as well as on guarantees backing up a “bad bank,” which will remain after Dexia’s dismantling in order to hold high-risk assets.

France and Germany are in disagreement over the price of Dexia Bank Belgium, the retail banking arm, which Belgium now wants to buy.

Belgian economic daily l’Echo estimated the price for the bank between three and 7.5 billion euros.

Belgian Finance Minister Didier Reynders said in a television interview on Sunday that buying up the subsidiary was not out of the question.

Credit ratings agency Moody’s warned on Friday that Belgium could be downgraded for supporting Dexia.

Several banks have shown interest in Dexia Bank Belgium, including Deutsche Bank, Credit Mutuel and Rabobank.

A Luxembourg delegation attended the meeting on Sunday to discuss negotiations to sell Dexia’s Luxembourg operations, Dexia BIL.

French President Nicolas Sarkozy and German Chancellor Angela Merkel met in Berlin, also on Sunday, to discuss Dexia and to try to compromise on a plan to strengthen banks amid Europe’s debt crisis.

 

 

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