Luxembourg’s Finance Minister Luc Frieden said today that discussions are taking place between Dexia and RBC relating to a buy out of Dexias 50% stake in RBC Dexia.
Speaking at a press conference shortly after the announcement of a Belgium, France and Luxembourg-backed restructuring plan that will see the sale of the Dexia’s Luxembourg unit Banque Internationale Luxembourg (BIL), Frieden said RBC intended to use its right of first option to buy out BIL’s stake in RBC Dexia. BIL is the entity in which Dexia’s 50% stake in RBC Dexia was held.
Frieden added that negotiations between the two parties are at an advanced stage.
As part of the restructuring plan, aimed at addressing Dexia’s funding shortfall in the wake of the European sovereign debt crisis and tensions in the interbank market, Frieden revealed that the intended buyer of BIL is an investment group representing the Qatari royal family and the same group that bought Belgian bank KBC’s Luxembourg-headquartered private banking arm KBL European Private Bankers. The latter deal was announced today. A binding offer for BIL will be submitted at the end of the two-week exclusivity period beginning on 10 October, Dexia said in a statement today. Frieden added that the Luxembourg state was still aiming to take a minority stake in BIL, although the size of this stake was not yet agreed.
The Dexia Group restrucuturing plan will also see the Belgian state buying Dexias holding in Dexia Bank Belgium and its subsidiaries, excluding Dexia Asset Management, for 4 billion. This deal will enable Dexia Group to reduce its short-term funding requirement by more than 14 billion and to reduce its portfolio of non-strategic assets by 18bn. The Belgian, French and Luxembourg government’s will also guarantee the groups funding for a period of up to 10 years, this guarantee being divided between the states as follows: 60.5% Belgium, 36.5% France and 3% Luxembourg. The Dexia group chief executive Piere Mariani has also been instructed to seek backing from French state bank Caisse des Depots. A consortium of CDC and La Banque Postale, the French post office’s banking arm, would ensure the financing of public entities in France.
(JDC)