BRUSSELS Feb 20 Nationalised Franco-Belgian
financial group Dexia suffered a relatively mild 95
million euros ($130.7 million) net loss in the fourth quarter as
it set aside money to cover its Puerto Rico exposure, but saw
its funding costs fall.
The bank, about 95 percent owned by the French and Belgian
governments, said on Thursday that brought its net loss in 2013
of 1.08 billion euros, an improvement from the 2012 figure of
2.9 billion euros.
The group, once the world's largest municipal lender, is no
more than a penny stock investment, but its results matter
because France, Belgium and, to a lesser extent, Luxembourg are
guaranteeing its borrowings by up to 85 billion euros.
The states, which have already pumped in billions of euros
to prop up Dexia, are threatened with losses that could derail
their efforts to rein in their budget deficits.
Dexia said its net bank income was actually positive in the
fourth quarter, after three straight negatives, as its liquidity
requirements fell and used cheaper government funding guarantees
and less of the more expensive central bank lending.
It also made one-off gains of 54 million euros related to
the disposal of assets, including securitisation vehicles of
Italian public lending arm Crediop.
For the year as a whole Dexia increased provisions for the
U.S. public sector, setting aside $223.5 million to cover the
risk of a default by the city of Detroit and Puerto Rico.
Dexia, now essentially a portfolio of loans and bonds in
run-off, said it had cut its balance sheet to 223.4 billion
euros, down by 134 billion since the end of 2012.
Dexia has benefited from a sharp reduction in the fee it has
had to pay for government guarantees to 5 basis points per year
from an average 85 basis points in 2012.
So far this year, the guarantees have cost it 157 million
euros, compared with 743 million for the whole of 2012.
Dexia has been stripped of all its activities, including
public sector lending and retail banking, after it failed to
recover from the 2007-2008 credit crunch, which deprived it of
access to short-term money to fund largely long-term loans.
($1 = 0.7271 euros)
(Reporting By Philip Blenkinsop; editing by Robert-Jan