Of Special Interest


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24th February 2012

Dexia €11.6bn LOSS

Dexia Group reports a LOSS of €11,639m (£9,848m $15,480m ¥1,242bn Y97,520m) for 2011. The parts of Dexia acquired by the Luxembourg and Belgium authorities are shown as discontinued operations. The remainder, including Dexia Municipal Agency, are to be split amongst different French state-owned financial institutions.

The results are not approved by the auditors. Dexia states that the auditors intend to approve the accounts with a qualification referring to the fact that the operation is shown as an ongoing one when this may not the case. The fact that the auditors had not approved the accounts was missed from the original dissemination of results.

Greek debt writedown of 75% of nominal value accounts for a at least €4.5bn of charges. The Greek costs are split between those shown in discontinued operations, in year end under Greek writedown and hedging losses. Whilst the Greek crisis may have been the final straw forcing state intervention many in the market had believed that Dexia would fail because it had been allowed to carry assets at unrealistic values by the authorities since the first rescue. In June the bank was forced to write down €1.745bn on €17.6bn transferred from long term hold to the 'for disposal group' for capital adequacy reasons. The significance is that the long term hold assets do not have to be marked to market whilst held for sale does.

The European Commission has allowed France, Belgium and Luxembourg to offer guarantees on Dexia business whist the restructuring plan is finalised. The EC is likely to have concerns about some aspects of the future plans for the group. In particular the French plan to split ownership of Dexia four ways in order to escape any one organisation having to show the business on balance sheet.