PARIS Jan 23 France's new municipal financing
body aims to renegotiate at least a billion euros per year in
toxic loans inherited from stricken bank Dexia, its
incoming head said on Wednesday.
France is setting up the Societe de Financement Local (SFIL)
to keep credit flowing to cash-strapped local authorities
following the collapse of Dexia, which used to hold 40 percent
of the municipal lending market.
The government is tapping the head of the Agence France
Tresor public debt management agency, Philippe Mills, to lead
the SFIL, which will raise funds on markets that is lent to
local authorities by the state-owned Banque Postale in a
partnership with another state-owned bank, the CDC.
SFIL, which will be 75-percent owned by the French state, 20
percent by the CDC and 5 percent by the Banque Postale, will
take on a portfolio of 90 billion euros ($120 billion) in loans
from Dexia's Dexma unit.
Of that figure, 9.4 billion euros are structured loans with
about 1,000 clients which are deemed to be at risk and in need
of renegotiation, Mills said.
"It will be part of SFIL's role to discuss with local
authorities... in order to renegotiate," Mills said at a news
conference. "We'll see what volume of renegotiation is possible
each year, (but) the aim is at least a billion euros."
Mills is to take up his new job on Feb. 1, and his current
deputy Maya Atig will run the AFT until his successor is named
in March, the agency said in a statement.
Dexia was propped up with billions of euros of public money,
after its model of relying on short-term borrowing to finance
long-term lending broke down as credit markets tightened.
Bank of France Governor Christian Noyer warned in October
that French municipal authorities faced a funding crunch unless
a successor to Dexia was not set up by the end of January.
(Reporting by Leigh Thomas and Yann Le Guernigou; Editing by