Dexia is seeking a new brand name

Belgian newspaper De Standarad reports that the folks at twice bailed out Franco-Belgian bank Dexia are looking for a new name for the company. Apparently, the Dexia brand has been tarnished.

Dexia is Belgium’s version of NCNB, now called Bank of America, a small bank that grew enormously through expansion and acquisition.

Here’s how I put it on Bank of America when they received their second bailout:

Now that the government has bailed out Bank of America, I want to remind you that this Bank is a serial acquirer and that the Merrill acquisition is not the only boneheaded move by Bank of America.

Bank of America is really the super-regional Nations Bank, also known as NCNB, that came of age in a bull market by buying its way into the big league. Nations merely put the Bank of America name on the front doors because that name has more caché.

–Countrywide is the real problem at Bank of America, Jan 2009

Dexia was a relatively new brand anyway. It came onto the scene in 1996 as a result of the merger of the Belgian Crédit Communal de Belgique (Gemeentekrediet in Dutch) and Crédit Local de France, itself founded in just 1987.

The bank history on Wikipedia hints at the hyper-expansion strategy from a safe, local community bank to the daring and exciting international player which has failed:

Belgium: Gemeentekrediet van België / Crédit Communal de Belgique

• 1860 – Foundation of the Gemeentekrediet van België / Crédit Communal de Belgique, specifically aimed at financing the investments of the local administrations. The communities were shareholders, for a value of at least 5% of the amounts drawn.

• 1947 – Development of a network of retail branches that allow drawing funds from the general public through savings accounts. From 1960 on the branches were run by independent agents, allowing a broader range of services and products to be offered and a lasting relationship with clients to be developed.

• 1990 – Start of the international expansion of the bank with the creation of the Cregem International Bank in the Grand Duchy of Luxembourg, specialising in the management of large sums of money.

• 1991 – The Gemeentekrediet builds on its international expansion by taking a stake of 25% in the Banque Internationale à Luxembourg (BIL), the biggest bank in Luxembourg. In early 1992 the firm increased its stake in BIL to 51%.

France: Crédit Local de France

• 1987 – Foundation of the Crédit Local de France as a successor to the CAECL (Caisse d’aide à l’équipement des collectivités locales); it was a public administrative institution, managed by the Caisse des dépôts. The Crédit Local de France was a specialised financial institution responding to the needs of local administrations, that have become important economic agents in their own, and make as much use of products and services of the financial markets as businesses.

• 1990 – The Crédit Local de France begins an international expansion with the opening of an American subsidiary, the CLF New York Agency. Aiming at a similar development in Europe, the CLF mainly operated in Great Britain, Spain, Germany and Italy; additional activities were later added in Austria, Scandinavia, and Portugal.

• 1991 – Crédit Local de France underwent an initial public offering on the Paris Stock Exchange. The shareholders at the time were the French State (25.5%), the Caisse des dépôts (25%), and individual investors from France and abroad (49.5%).

Dexia: the group

• 1996: Merger of the Gemeentekrediet / Credit Communal de Belgium and the Crédit Local de France to form Dexia.

• 1997: Dexia takes a stake of 40% in the Italian firm Crediop, the biggest privately owned bank specialising in finance for Italian local administrations.

• 1998: Dexia increases its shareholding in Crediop to 60%.

• 1999: First listing of Dexia Group as a dual-listed company on the Brussels and Paris stock exchanges in November, at a price of €6.86 per share. In Belgium the stock became part of the BEL20 index, and in France of the CAC 40. The group broadens its insurance activities in France, Belgium and Germany.

• 2000: Acquisition of Financial Security Assurance (FSA) in the United States, a major player in credit enhancement for municipalities, making Dexia the world leader in the market of financial services to the public sector. Dexia is active in nearly all European countries in this market as well. Start of an annual reserved capital injection to which only Dexia members of staff can inscribe.

• 2001: Acquisition of Artesia Banking Corporation, a banking group with activities as retail bank (BACOB), insurance (DVV) and asset management (Cordius). The stake in Crediop grows to 70%, and Dexia gains control over Otzar Hashilton Hamekomi, an Israeli credit provider for local authorities.

• 2002: Integration of the Artesia branches in Belgium.

• 2006: Acquisition of 99.8% of the Turkish firm Denizbank.

• 2006: Royal Bank of Canada created Institutional Investment Joint Venture with Dexia. It is a 50/50 Partnership called RBC Dexia Investor Services.

That’s all history now. Dexia will take on a new name. Here’s De Standaard (my translation):

By mid-November CEO Jos Clijsters will decide in principal, based on market research, whether a new name is needed. That should reveal how heavily the Dexia brand has been tarnished and whether a name change will sit well with customers. But if the decision were solely based on what the bank leadership thinks, a name change would come as quickly as possible.

Source: Dexia zoekt nieuwe naam, De Standaard