* Dexia would be exempted from crisis case stress scenario
* Dexia already singled out as special case
* Franco-Belgian group being gradually wound down
(Adds sense of Dexia as unique case, Dexia background)
By Laura Noonan and Paul Carrel
DUBLIN/FRANKFURT, May 22 ECB officials agreed on
Thursday that Franco-Belgian bank Dexia would not have
to prove it could withstand a financial crisis in a Europe-wide
stress test, reducing the chances of it needing further state
aid, sources familiar with the talks said.
Belgium and France have already pumped nearly 12 billion
euros ($16.4 billion) into Brussels-based Dexia since the
financial crisis, taking control of it in the process, and are
keen not to put in more to a loss-making institution that is
being wound down.
Dexia, the European Central Bank and the EBA (European
Banking Authority) all declined comment.
The ECB's supervisory board agreed at a meeting in Frankfurt
to recommend to the central bank's governing council that Dexia
must only prove it has enough capital to weather the most likely
economic scenario, and not the crisis scenario other banks must
prove they can withstand.
Dexia, which will come under the ECB's direct supervision in
November, was originally on the list to take part in a stress
test being carried out on 128 euro zone banks to prove they have
enough capital to withstand another crisis.
However, the ECB had already recognised Dexia's "specific
situation", with an assessment of its finances carried out over
its 2011 wind-down plan.
That EU-approved plans makes Dexia unique among the 128
major euro zone banks being reviewed by the European Central
Bank (ECB) and the 124 EU banks that are being subjected to
stress tests by the European Banking Authority (EBA).
One source who spoke to Reuters said Dexia, formed by a
Franco-Belgian merger in 1996, was indeed a unique case and its
treatment should not have implications for other banks which
have been arguing against various elements of the stress tests.
The stress tests and a related review by the ECB have
already prompted several banks to raise funds, most recently
Deutsche Bank, which on Sunday announced plans to
raise 8 billion euros. (ID:nL6N0O40WU)
Dexia's chief executive said in March the bank was at risk
of failing the EU review and might need to raise capital again -
money that would most likely come mainly from the French and
Belgian treasuries which currently guarantee much of Dexia's
Belgium, France and other shareholders put 6 billion euros
into Dexia at the height of the global financial crisis in 2008.
The bank subsequently secured guarantees for its borrowings from
the two states and, to a lesser extent from Luxembourg. These
now total some 79 billion euros.
Dexia has said it aims to reduce that to 45 billion euros by
the start of 2015. Belgium and France paid in another 5.5
billion euros in total in 2012, effectively nationalising Dexia
after persistent losses had eaten into its assets.
($1 = 0.7323 Euros)
(Additional reporting by Phil Blenkinsop and Huw Jones; Editing
by Alexander Smith and David Evans)