Dexia's Luxembourg subsidiary enters takeover talks

6th October 2011, Comments 0 comments

The Luxembourg subsidiary of troubled bank Dexia entered advanced talks with an un-named foreign buyer Thursday, as the Belgian government considered taking a sizeable stake of its core.

"Negotiations are at an advanced stage and should conclude by the end of the month," said Luxembourg Finance Minister Luc Frieden.

He said "an international investor is ready to acquire Dexia BIL in order to pursue its strategic development overseas."

The Luxembourg state would remain a minority shareholder in the bank, which has a staff of 5,500.

"The board of directors of the Dexia group will take a decision on a potential offer by the end of the exclusive period," the bank added in a statement.

France and Belgium were forced this week to leap to the rescue of cross-border bank Dexia, the first European bank to be dragged down by the eurozone debt crisis -- and which also had to be rescued in 2008.

The French government is looking at hiving off operations involving tens of billions in outstanding loans with local government authorities there, handing them to a French government fund and a state-run postal bank.

Business daily L'Echo reported Thursday that the Belgian government, following cabinet talks, favours nationalising what is left, and said finance minister Didier Reynders has been tasked with negotiations.

Asked to comment by AFP, the Belgian government would not confirm its intentions.

By the middle of the day, Dexia shares had lost almost 10 percent of their value on the Brussels stock exchange.

Concerns that some banks in the European Union might face difficulties if the eurozone debt crisis worsens, as they hold large amounts of debt bonds issued by countries under pressure, drove down markets this week.

But pledges from the EU executive and European governments of concerted action to shore up the banking sector have reassured the markets.

© 2011 AFP

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