France to create new bank for local authorities: Sarkozy

11th October 2011, Comments 0 comments

France will create a new bank to finance local authorities following the dismantling of Franco-Belgian lender Dexia, President Nicolas Sarkozy said on Tuesday.

Formed by the Caisse des Depots, a state investment fund, and the banking arm of the state-run post office, the new bank will be operational in a few months, Sarkozy said during a speech in the central town of Aubusson.

"We have decided to create... a bank for local authorities so that financing of local authorities will be guaranteed," he said, adding that the bank would not deal in "risky products".

"This new bank for local authorities will be operational in a few months and will offer loans not only to municipalities but also to small- and medium-sized businesses," Sarkozy said.

Belgium, France and Luxembourg decided on Monday to dismantle Dexia, the first bank to fall in Europe's debt crisis, with Belgium agreeing to pay 4.0 billion euros ($5.36 billion) to nationalise Dexia's domestic retail unit.

The three governments guaranteed the bank to the amount of 90 billion euros, with 60.5 percent for Belgium, 36.5 percent for France and 3.0 percent for Luxembourg.

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

France's National Assembly is to debate and vote on the French guarantees of the bank on Monday, assembly chief Bernard Accoyer said.

© 2011 AFP

0 Comments To This Article