Dexia nationalised for a high price

“Playing poker with taxpayers money,” headlinesDe Morgen. The Flemish daily announces that on 9 October, the governments of France, Belgium and Luxembourg reached agreement on the dismantling of Dexia. The Belgian state will take control of 100% of Dexia Banque Belgique (DBB), the Belgian branch of the group which is specialised in retail banking, in exchange for 4 billion euros. “Belgium only wanted to pay 3 billion, while France wanted to sell for 8,” notesL’Echo.

This is a relatively low evaluation, but at the same time Belgium “will have to act as a guarantor for 50 to 60 billion of potential losses caused by Dexia’s toxic assets,” which have now been placed in a bad bank. The Belgian guarantee will cover 60.5% of these investments, while France will cover 36.5% and Luxembourg 3%. “Economists have warned against a downgrading of Belgian bonds which would result in greater sovereign debt,” remarks De Morgen, which argues that “Belgian taxpayers may have to pay a high price for the bailout of Dexia.” On 8 October, Moody’s rating agency warned of a negative outlook for Belgian debt.