29 April 2005

AMSTERDAM — Franco-Belgian bank Dexia is in the verge of agreeing a EUR 1 billion compensation deal with indebted Dutch investors who claim they were misled by a share-lease scheme.

The compensation offer — brokered by former European Central Bank chief Wim Duisenberg — involves 350,000 contracts and the significant repayment of investor debts.

Lobby foundations Leaseverlies and Eegalease — which plagued Dexia for the past three years with legal battles — have advised their clients to accept the deal.

Duisenberg said the parties reached agreement on Thursday night. If investors approve the deal, arrangements can be set in place by the end of June.

The deal will cost the bank EUR 400 million. However, EUR 218 million of that amount will be paid by insurer Aegon, which sold Dexia a company which handled share-lease schemes in 2000.

Dexia will take an additional EUR 100 million pre-tax charge in the first quarter because of the settlement. This is on top of EUR 700 million that had previously been put aside for a settlement.

Investors with a share lease contract will have two-thirds of their debts absolved. Partners who co-signed the contract will be repaid in full. Clients who earlier reached a deal with Dexia will be offered a more generous settlement.

Dexia is hopeful that the deal will gain broad support, while a spokesman from Leaseverlies and Eegalease said he was pleased with the outcome of talks. Stock market watchdog AFM also welcomed the proposed deal.

At the end of the 1990s, investors were offered contracts to invest in the stock market with borrowed money. They could use the shares as security for the loans. But when stock prices started to fall in 2000, investors were left with huge debts.

Duisenberg was asked by the Dutch Central Bank DNB to negotiate a deal between Dexia and investors. The issue has been described as the largest collective legal battle in Dutch history.

[Copyright Expatica News + ANP 2005]

Subject: Dutch news