Dexia Bailout in Jeopardy

BRUSSELS – Belgium asks France to renegotiate the bailout Dexia Holding, also on the distribution of the state guarantee of 90 billion. The euro crisis plan unfeasible.
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Coup de théâtre in the Dexia case. While President Jean-Luc Dehaene again yesterday for the special committee appeared to Dexia a clarification of the trap and the dismantling of Dexia, shows a significant proportion of the Belgian-French agreement of October 9 obsolete.

In particular, the rescue plan that Belgium, France and Luxembourg have agreed in early October for Dexia Holding (the remaining bank, save), stands on the slope. And this includes the much talked about 90 billion state guarantee on bank financing of the rest – especially the more massive historical bond portfolio and the daughters of Dexia remain unsold.

Belgium took France by persuading the majority (60.5 percent) of financing the rest with a Belgian bank Dexia state guarantee to cover. This guarantee, Dexia to enable the next year to 54 billion euros from the Belgian bond market to pick up. This would come in direct competition with Belgium itself, that money needs to get his debt and deficit financing.

The Belgian bond market is quickly drying up. This makes it impossible for the coming years tens of billions of Dexia to retrieve. Specialists estimate that for Dexia ‘only’ room for 20 to 25 billion euros from the Market. Since the agreement Dexia Belgium mistrust of financial markets, allowing long-term rates has increased dramatically: the beginning of October is 3.6 percent in Belgium paid ten-year loan, now it is 4.9 percent. And that has consequences for the rest of the financing bank. “Dexia becomes intolerable as it is such high interest rates on the market to pay, insiders warn.

French way

Belgium, France and the European Commission has therefore already stated that the bailout Dexia Holding need re-negotiation. As a possible way a new agreement in which the French, backed by Belgium, one additional share of the funding to take on.

Much time is not. For the euro crisis threatens not only Belgium in need of money to bring the whole bailout for Dexia falters.

Dexia Holding should not only pay high long-term market, it needs also a costly fee for the state guarantee. Total (financing) costs of the massive bond portfolio in the rest thereby threaten the bank proceeds to beat. Allowing the remaining banks are structurally unprofitable.

All parties involved are treated with the hands in the hair. “What now?” The remaining bank fail let go is not an option, it reads. The consequences for Dexia Bank Belgium (DBB) could not be foreseen. “The Belgian state bank to the rest Dexia Bank overdraft – no guarantees, so – given 20 to 25 billion euros, and then we lost all that money.”

Belgium sees the only solution is that France itself the bulk of the money that the rest Dexia bank needs from the French bond market gets. Belgium would be the part that France collects on behalf of our country, with guarantees covering.

But the French are not designed for jumping. They believe that Belgium commits perjury. Paris itself is under great pressure. The credit agency Moody’s yesterday put pressure on France once again by openly to question the sustainability of the French AAA credit rating. In addition, in the spring French presidential elections.

Dexia Belgium ruin.

Source: De Standaard

h/t: @zerohedge