Oct. 10 (Bloomberg) -- Dexia SA Chief Executive Officer Pierre Mariani reliance on short-term funding undermined the bank, which announced a restructuring today.
“The fragile point of the group is not its capital level,” Mariani told a press conference today in Brussels. It was reliance “on short-term funding that caused the fall of the group,” he said.
“The recapitalization was an inappropriate response to difficulties of the company” in 2008, Mariani said. Dexia’s problem “was and is” a liquidity problem, he said, adding that "it has never been a problem of solvency."
Mariani said Moody’s Investors Service put Dexia “under pressure” last week when the ratings company placed the bank’s three main operating units on review for a downgrade on concern the lender was struggling to fund itself. "Everyone can have their own views" about timing of Moody’s statement and whether it creates "self-fulfilling prophecy," Mariani said.
He also stressed that Dexia "didn’t have any problem on the dollar funding side.’’
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