Major withdrawals from Dexia in Belgium: chief

10th October 2011, Comments 0 comments

Clients in Belgium withdrew significant funds from Franco-Belgian bank Dexia ahead of its rescue Monday but not in amounts comparable to during the bank's near collapse in 2008, its chief said.

"There were significant withdrawals but ... not commensurate with what was seen in 2008," bank head Pierre Mariani said during a conference call.

Belgium, France and Luxembourg rescued Dexia on Monday, splitting up the bank after it became the first lender to succumb to Europe's debt crisis as the eurozone braced to recapitalise its banks.

The bank offers retail services in Belgium while its French arm is focused on financing for local governments.

Belgian economic daily De Tijd reported last week that account-holders had withdrawn 300 million euros ($407 million) from the bank, a small fraction of savings in private accounts and far below the amount pulled out in the bank's 2008 crisis.

Belgium's central bank earlier reassured account holders, saying the central banks of both Belgium and France "fully support" Dexia.

Dexia had to be rescued in 2008 at the start of the global financial crisis when it found itself overexposed to US sub-prime housing loans which turned bad.

Belgium agreed after board and cabinet meetings to pay 4.0 billion euros ($5.36 billion) to nationalise Dexia's domestic consumer-lending unit.

The dismantling of what was one of the largest lenders in France and Belgium three months after it passed European stress tests has brought the banking crisis from the continent's Mediterranean periphery to its economic heart.

© 2011 AFP

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