Bloomberg News

Belgium Weighs Bank Firewalls in Dexia Response, Le Soir Says

March 24, 2012

A Belgian parliamentary committee investigating the failure of Dexia SA (DEXB) will recommend that lenders should be forced to put firewalls between their retail and investment arms, Le Soir reported, citing lawmakers involved in the talks.

The committee, which completed its work yesterday, will also call for the creation of a European Union-wide banking regulator and for curbs on the ability of elected officials to hold management positions at banks, the paper said.

Dexia, based in Brussels and Paris, is being broken up after last year losing access to short-term funding. The bank has said that disposal losses, additional writedowns on Greek bonds and a slide in the value of other government debt depleted its shareholders’ equity.

The bank in February reported a record loss of 11.6 billion euros ($15.4 billion) for 2011, compared with profit of 723 million euros for the prior year. Dexia’s own funds dropped to a negative 2.02 billion euros from 1.13 billion euros at the end of September.

The committee’s report is non-binding and will be debated in parliament.

To contact the reporter on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net

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


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