Bloomberg News

Dexia’s Luxembourg Unit Won’t Become a State Bank, Frieden Says

October 04, 2011

Oct. 4 (Bloomberg) -- Luxembourg Finance Minister Luc Frieden said Dexia SA’s Luxembourg unit is a “solid bank” and won’t be taken over by the government.

Dexia Banque Internationale a Luxembourg SA has “no liquidity problem,” Frieden told reporters today in Luxembourg. While “the Luxembourg government will take an active part in the restructuring” of the Dexia group, the Luxembourg operation “won’t be a state bank,” he said.

France and Belgium said today that they will take “all necessary measures” to protect Dexia clients and will guarantee the bank’s loans after shares of the lender plunged on concern it will require a second government bailout. Belgium’s cabinet will meet in Brussels tonight to review the options for the group.

“All instruments are in place so that Group Dexia won’t have any greater difficulties during this restructuring phase,” Frieden said. “It’s a problem of a restructuring within the priorities that are set by shareholders.”

Frieden said the Luxembourg government’s participation “will exclusively relate to the Luxembourg part.” The government seeks “to make sure that the retail activities of that bank in Luxembourg will be maintained and even more, can be expanded in the future,” he said.

“The Luxembourg state has great interest that Dexia BIL remains a large and important bank and economic actor and this isn’t questioned,” Frieden said. “Deposits in this bank are at all times secure.”

--Editors: Patrick Henry, Jones Hayden

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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