As we reported on Friday, Dexia, the troubled Franco-Belgian bank, has been nationalised over the weekend. At the time, I indicated this would be a negative for the sovereign’s creditworthiness. Moody’s, the ratings agency, agrees and has placed Belgium on review for downgrade.
Belgium will pay €4 billion to buy Dexia Bank Belgium, the Belgian division of the bank with deposits of €80 billion, four million customers, and over 6,000 staff. €90 billion in assets have been placed into a ‘bad bank’ with guarantees from the Belgian, French and Luxembourg governments (60.5%, 36.5%, and 3% respectively).
Below, the Belgian Prime Minister says the new nationalised rump Dexia is safe – or “200% safe” as he is quoted saying by Belgian daily De Tijd.
Meanwhile, what I have been calling ‘the European Bank Run’ has claimed a second victim in Greek bank Proton.