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France seen taking stake in Dexia unit: sources
January 31, 2012 / 5:45 PM / 6 years ago

France seen taking stake in Dexia unit: sources

PARIS (Reuters) - The French government would take a stake in Dexma, the municipal finance unit of rescued Franco-Belgian lender Dexia (DEXI.BR), under a revised plan that has yet to be fine tuned, sources close to the matter told Reuters on Tuesday.

French, Belgian and Luxembourg authorities bailed out Dexia in October and decided to dismantle the business after the worsening of the euro zone debt crisis made it clear that the bank would not survive on its own.

Earlier, newspaper Le Monde had said the new plan would see France directly taking over about 25 percent of the unit, with state bank CDC becoming a minority investor to the tune of 35 percent and Banque Postale, France’s post office bank another 5 percent.

Another 35 percent would still be controlled by Dexia, the paper had said,

“Things are going in that direction but the scheme is not fully stabilized yet,” said one of the sources, adding that no final decision had yet been taken.

A second source said that the idea that the French state would take a stake in Dexma was under review but that it was still unclear how big the stake would be, adding it could even be at par with that of CDC.

Both CDC and Dexia, whose Belgian banking business has already been nationalized by Belgium, declined to comment.

The French finance ministry could not be immediately reached for comment.

Since the bailout, Dexia has been in talks with CDC and La Banque Postale, about taking stakes in Dexma, on which hundreds of French towns and cities depend for credit.

An original agreement under which CDC would take a 65 percent stake in Dexma has been abandoned with the agreement of the major parties to the talks including the Elysee Palace, according to Le Monde.

The change to the initial agreement came amid concern that CDC, which in recent months has raised its profile in the French economy by injecting funds into troubled insurer Groupama and by widening its role in interbank lending, could become overextended.

The deal would also set the stage for the creation of a new bank for local governments that would be 65 percent owned by Banque Postale and 35 percent by CDC. The new bank’s loans would still be underwritten by Dexma, however, Le Monde said.

Reporting By Julien Ponthus, Christian Plumb and Matthieu Protard; Editing by Greg Mahlich and Jodie Ginsberg

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