January 23, 2014 / 5:26 PM / in 4 years

Dexia secures legal win in Pisa derivatives case

BRUSSELS, Jan 23 (Reuters) - A top Italian court has ruled in favour of Franco-Belgian lender Dexia in a dispute over an interest rate swap deal with an Italian province, removing one hurdle to the bailed out lender’s wind-down plan.

Dexia, almost entirely nationalised by France and Belgium, said on Thursday that Italy’s court of cassation, the top appeals court, had declared inadmissible the case brought by the province of Pisa against Dexia’s Italian unit Dexia Crediop.

The court thereby upheld a decision of the council of state and ordered Pisa to pay legal costs, Dexia said.

Dexia, whose future has a bearing on the budgets of Belgium and France, has faced a series of legal challenges from public bodies in France and Italy, and the latest ruling removes some uncertainty around the group.

Dexia said the ruling confirmed the validity of the derivative deal struck with Pisa, with a current nominal value of 29 million euros ($40 million), and that Crediop had not failed in its advisory duty.

The province of Pisa, it said, would have to pay 6 million euros of interest including penalties due since June 2009.

Dexia, stripped of its businesses, has been reduced to a portfolio of bonds and loans being wound down and funded by its own borrowing, much of that state-guaranteed.

As an investment, Dexia is a mere penny stock, but it matters because France, Belgium and to a lesser extent Luxembourg are guaranteeing up to 85 billion euros of its borrowing.

Belgium and France pumped 5.5 billion euros into Dexia at the end of 2012, pushing their combined holding in the group to more than 94 percent.

$1 = 0.7310 euros Reporting by Philip Blenkinsop; Editing by Mark Potter

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