Dexia reports a record 4 billion euro loss
(ADW) Dexia bank has reported a record loss of 4.032 billion euros in the second quarter of 2011. In the first quarter, the bank gained just 69 million euros. The bulk of this result was related write-offs the bank stressed in its communication.
Brussels is now calling for the rescue of Dexia by Luxembourg, France and Belgium, with a reduction of 35 percent of total assets. Managers of the bank did however stress that the group has been accelerating its restructuring plan.
The impact of these measures Dexia estimated at 3.675 billion euros. As an example, Dexia has sold 94 percent of the American "Financial Products" portfolio. The figures of these securities, guaranteed by France and Belgium amounted to 8.8 billion dollars. The resulting loss of Dexia is estimated at 1.9 billion euros.
Increase in commercial activities
The Bank participates in the aid plan for Greece, providing bonds which run until the end of 2020. These will be exchanged with a loss of 21 percent. At the end of June, the Bank held bonds from Athens to the tune of 1.8 billion euros. The resulting loss they estimate at 377 million euros.
If these “unique” elements are factored out, the performance was still good, states the bank. Commercial activities increased by 25 percent, according to Dexia. For the third quarter, bank managers are expecting a profit.
Luxembourg Dexia BIL results positive
Throughout the year overall the bank is expecting a loss. Two months ago, Pierre Mariani the bank’s Director stated that in 2011 no bonus and no dividends will be paid.
The results of Dexia BIL, however, remain positive, confirmed a spokesman for Dexia’s Luxembourg arm. In retail banking, the bank had exceeded its targets for the first semester.
In Private Banking, the results were also positive, but this area is under increasing pressure. By default Brussels reduction in total assets by 35 percent in profit is high; however, it is less than the previous year. The core capital ratio (Tier 1) at the end of June reached 22.1 percent, and the Luxembourg bank is already compliant with the stringent Basel-III regulations, a spokesman stressed.