Restructuring plan for Dexia

Commission plan requires the bank to focus on its core banking activities and traditional markets.

The European Commission today imposed restructuring measures on Franco-Belgian bank Dexia to prevent aid it received during the financial crisis from distorting competition.

The restructuring plan adopted by the Commission requires the bank to focus on core banking activities and on its traditional markets of Belgium, France and Luxembourg. The bank must also cease proprietary trading, and respect a set of liquidity ratios that are supposed to prevent it from becoming excessively exposed to risk.

Joaquín Almunia, the European commissioner for competition, said that the restructuring measures would restore Dexia’s “long-term viability, in particular thanks to more stable financial resources”.

The restructuring plan was negotiated between the Commission and the governments of Belgium, France and Luxembourg, which all provided state aid to Dexia during the financial crisis.

The aid, which was provided in November 2008, consisted of a capital injection of €6 billion, a €150bn guarantee on liabilities, emergency liquidity support from the Belgian National Bank, and a guarantee on impaired assets.

The Commission could have forced the bank to pay back the aid, had it been unable to reach an agreement with the three governments on restructuring measures.

“The gradual cessation of certain activities provided for in the restructuring plan will be enough to offset the distortions of competition caused by the aid,” the Commission said.

Click Here: New Zealand rugby store