PARIS Talks on creating a new entity combining Dexia's (DEXI.BR) local government lending arm with French state bank Caisse des Depots and Banque Postale are ongoing but likely to be finalized, a senator from French President Nicolas Sarkozy's center-right party told Reuters on Tuesday.
The French state does not expect to inject capital into this new entity, which would safeguard the financing of France's local governments and regional authorities, Senator Philippe Marini said in an interview.
"As far as I know the government has opened negotiations with the aim of a restructuring that would safeguard the financing of regional governments...As far as I know these talks are going well and should result in the creation of a lending entity for local governments under the aegis of the Caisse des Depots and the Banque Postale," Marini said. "It's still being negotiated but the finalization seems very likely."
Marini added: "The state is not planning to inject capital into this new entity."
(Reporting By Lionel Laurent; Editing by Christian Plumb)