Bloomberg News

Luxembourg to Take Stake in BIL as Dexia Negotiates Sale

October 06, 2011

(Updates with size of BIL starting in sixth paragraph.)

Oct. 6 (Bloomberg) -- Dexia SA is in exclusive talks to sell its Luxembourg unit to a group of international investors as the Franco-Belgian lender is broken up.

The Luxembourg government will take a minority stake in Dexia Banque Internationale a Luxembourg SA, Finance Minister Luc Frieden told reporters today in Luxembourg. Talks are in an advanced stage and should be concluded by the end of the month, he said. Dexia would then review any potential offer, the Brussels- and Paris-based lender said in a separate statement.

“Given the systemic character of BIL in Luxembourg, the Luxembourg state will enter as minority shareholder into the capital of this bank,” Frieden said. “We believe very strongly in the future of BIL. This is a project oriented to the future that will give the bank new perspectives.”

The disposal is part of Dexia’s planned breakup, with the profitable assets such as Dexia Bank Belgium NV, DenizBank AS, Dexia BIL and the asset-management division being sold to free capital for a so-called bad bank holding Dexia’s troubled assets, leaving little value for shareholders. Belgium plans to nationalize the Belgian bank pending a sale, De Tijd reported today.

Dexia fell as much as 16 percent in Brussels trading after Frieden announced the talks to sell BIL, erasing earlier gains. The shares declined 11 cents to 91 cents by 1:11 p.m. local time, for a market value of 1.78 billion euros ($2.38 billion).

Sixth-Biggest Bank

With assets of 32.3 billion euros and shareholder equity of 1.77 billion euros at the end of last year, BIL ranks as Luxembourg’s sixth-biggest bank, according to an annual report about the Luxembourg banking industry drawn up by KMPG Europe LLP’s subsidiary in the country. Net income at the unit fell 25 percent to 129 million euros last year.

Tracking its origins to 1856, which makes it Luxembourg’s oldest bank, BIL offers retail, commercial and private banking services. The bank held about 12.6 billion euros of customer deposits last year, an 11 percent decline from a year earlier and dropping to fifth position, according to the KMPG report.

Frieden said he couldn’t reveal the identity of the potential buyer and said the minority stake of the Luxembourg state is still subject to negotiations, adding that he doesn’t expect a transaction to result in a reduction in jobs.

With a workforce of 1,854, BIL is the second-biggest employer in the country’s banking industry, after BNP Paribas SA’s unit.

--With assistance from John Martens in Brussels. Editors: Jones Hayden, Edward Evans

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

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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