Dexia's Luxembourg subsidiary in takeover talks

6th October 2011, Comments 0 comments

The Luxembourg subsidiary of troubled Franco-Belgian bank Dexia was in talks with an un-named foreign buyer Thursday, as the group said it had no information on its future after reports Belgium would take a stake of its core operations.

"Dexia wishes to emphasise that it has not been informed of any decision or draft decision on future options for the Group," a statement said in Brussels, adding that a board meeting would take place Saturday "which will discuss various options on the future of the Group."

Earlier, Luxembourg Finance Minister Luc Frieden said negotiations were at an advanced stage with an international investor ready to acquire Dexia BIL.

The talks "should conclude by the end of the month," Frieden said, adding that the Luxembourg state would remain a minority shareholder in the bank, which has a staff of 5,500.

France and Belgium were forced this week to leap to the rescue of 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 early afternoon, Dexia shares had lost over 13 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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