France, Belgium and Luxembourg agreed yesterday on a rescue plan for battered lender Dexia ahead of a planned board meeting expected to decide on a breakup of the bank.
Reuters reported yesterday that the sale of Denizbank, the Turkish unit of Dexia, was part of the plan.
French Prime Minister Francois Fillon, his Belgian counterpart Yves Leterme and Luc Frieden, the finance minister of Luxembourg, where Dexia has a large presence, had found a solution for the stricken Franco-Belgian bank, Leterme’s office said yesterday afternoon.
“The governments … have reaffirmed their solidarity in finding a solution to secure the future of Dexia,” said the statement, which was released after two hours of talks at Egmont Palace in Brussels. “The suggested solution, which is also the result of intense consultations with all partners involved, will be submitted to Dexia’s board of directors for approval.”
Dexia’s overhaul will likely see its French municipal financing arm split from the group and merged with French state bank Caisse des Depots and Banque Postale, the French post office’s banking arm.
The Belgian government wants to nationalize Dexia’s largely retail banking business in Belgium.
“Healthy units, such as Denizbank in Turkey, will be sold,” Reuters reported.
Denizbank was a rare success story for Dexia, which has been hit both in the 2008 crisis and the current sovereign debt turmoil. Dexia acquired 75 percent of Denizbank from the Zorlu Group in 2006 for $2.44 billion. Dexia later acquired more shares and currently owns 99.84 percent of the bank, while 0.16 percent of the shares are being traded at the Istanbul Stock Exchange.
According to data from the Denizbank website, the lender has an asset size of 39.19 billion Turkish Liras, while deposits have reached 23.4 billion liras. With 552 branches, Denizbank employs 10,350 people.
Dexia’s board was meeting yesterday in Brussels as the Hürriyet Daily News went to press. The bank’s shares have dropped 42 percent over the past week and have been suspended since Oct. 6.