* Planning talks with French partners on Thursday
* Dexia Belgium could be nationalised - Belgian PM
* "Exaggerated" to think French rating to be hit - Noyer
* Some depositors withdraw funds, but no sign of bank run
* Dexia customer helpline "overloaded"
* Shares up around 2 pct
(Adds board meeting on break-up)
By Lionel Laurent and Philip Blenkinsop
PARIS/BRUSSELS, Oct 5 Worried customers
withdrew funds and overloaded the telephone helpline of
Franco-Belgian bank Dexia (DEXI.BR) on Wednesday ahead of a
crucial weekend board meeting to approve a rescue plan and stop
its troubles from deepening the euro zone debt crisis.
Dexia's board is due to meet in Paris on Saturday to vote
on a break-up plan for the lender, two sources familiar with
the matter told Reuters on Wednesday.
Belgium and France are expecting to finalise the rescue by
Thursday so the board can vote. There have been some
disagreements over details of the plan as the two countries
have tried to defend their respective national interests, one
of the sources said.
The source said that Dexia's board may have to choose
between "a French and a Belgian option" on Saturday if the two
sides cannot come to terms.
"These are still open discussions, rest assured (all of
Dexia's assets) everything will be sold eventually," the source
Dexia is in need of support for a second time in three
years because of its exposure to Greek debt and trouble
accessing wholesale funds.
One French politician has already expressed concern that
the problems facing Dexia, a key player in municipal funding,
might contaminate other banks and hit already tight financing
for local authorities.
"We have had some customers taking money out, but it has
been limited," a Dexia spokeswoman said. "We have faced many
questions, and we have been explaining the situation a lot."
Dexia's telephone helpline began with a warning that its
system was 'overloaded'. Otherwise, there were no obvious signs
of panic or queues at Dexia's branches in Brussels.
"It doesn't worry me, I know it will be okay," said Mora
Ba, a 39-year-old plumber, coming out of a branch in Brussels.
Claude Bartolone, a lawmaker for the Seine Saint-Denis
department north of Paris, said details were urgently needed.
"It would be unacceptable to contaminate the Banque Postale
and especially the Caisse des Depots, given the trust that
exists between it and local governments," he said.
He added the rescue of Dexia had come at a very difficult
time for the local authority funding, with tougher capital
rules and market volatility tightening the screws for banks.
Maurice Vincent, the mayor of St Etienne, said Dexia's
market share for local finance in France had dropped to 10
percent from 20 percent in recent months, although they still
held around half of all loans to municipalities.
In Belgium, the 589 cities, towns and districts which
jointly hold a 14.1 percent stake could face an end to
dividends and a capital loss that could bring down their
"We are already in a tough situation," said Michel De
Herde, finance chief at Schaerbeek commune in Brussels. "If
things go wrong it would also not be good for the public
finances of Belgium as a whole," he said.
France, Belgium pledge aid for ailing Dexia
DEALTALK-Govts to let curtain fall on Dexia
France eyes mayor-friendly way out
FACTBOX-History repeating for Dexia
THE BIGGER PICTURE
Europe wakes up to need for bank aid plan
EU prepares rescues amid Greece doubts
Dexia: a one-off or a warning shot?
Pressure grows on EU to help ailing banks
Banks take Greek bailout defence to brink
Dexia's shares hit an all-time low on Tuesday but recovered
some ground on Wednesday as the Franco-Belgian rescue appeared
to take shape and as signs that euro zone finance ministers are
exploring ways to recapitalise banks boosted markets.
"I think that tomorrow a solution should be found,"
France's finance minister, Francois Baroin, told RTL radio.
Belgium's Prime Minister Yves Leterme said in a television
interview that discussions would start on Thursday, and a
decision should be made in days rather than weeks.
"I believe it's more a question of days than a question of
weeks," he said when asked when a decision was expected during
an interview with Belgian French-language television station
RTBF on Wednesday.
Belgian newspaper De Tijd reported customers had gone into
Belgian branches to withdraw 300 million euros ($398 million)
from Dexia accounts. This excluded online transactions. Dexia
in Belgium holds some 80 billion euros of deposits.
Belgium's prime minister and finance minister have said
Dexia savings were safe, with a government guarantee of 100,000
euros per account holder.
"Dexia clients saved" was the headline on top-selling
Flemish newspaper Het Laatste Nieuws.
Three years after Fortis was broken apart by Belgium, the
Netherlands and France's BNP Paribas (BNPP.PA), Belgians are
aware that a bank can go under, destroying shareholder value,
but without touching customer deposits.
BELGIUM'S BORROWING COSTS RISE
Under the rescue, the lender to thousands of French and
Belgian towns will see its French municipal funding arm broken
off and combined with French state bank Caisse des Depots and
Banque Postale, the banking arm of France's post office.
Belgium's caretaker prime minister, Yves Leterme, said
nationalisation of the banking activities, including a large
retail operation, was being considered.
Leterme also said guarantees Belgium planned to provide to
Dexia did not represent a risk for the country and, while
nationalisation would hit public sector debt, the increase
would be "quite limited."
However, Belgian government bonds underperformed their
German counterparts partly due to concerns that Belgium would
face a hefty bill for Dexia. The 10-year yield spread rose to
2.22 percent, a three-week high.
Bank of France Governor Christian Noyer said speculation
that support of Dexia would threaten France's AAA credit rating
were "exaggerated and inexact."
French banks, he said, were generally in good health and
the central banks of Belgium and France would ensure Dexia had
enough liquidity. "We will loan Dexia as much as it needs,"
Noyer told Europe 1 radio.
Dexia shares were 2 percent higher in late trading, albeit
29 percent down this week and 58 percent lower in the year to
date. In an online poll in De Tijd asking if investors would
end up with anything after the rescue, 75 percent of
respondents answered 'no'.
French banks also rallied. Credit Agricole (CAGR.PA) shares
were among the strongest in the FTSEurofirst 300 index
.FTEU3, up 7.8 percent. BNP Paribas shares were 6.2 percent
($1 = 0.753 euro)
(Additional reporting by Sophie Sassard and Victoria Howley in
London, Robert-Jan Bartunek, Ben Deighton in Brussels; Leigh
Thomas and Alexandria Sage in Paris; Editing by Andrew Callus
and David Cowell)