Brussels, 26/09/2012 (Agence Europe) - On Wednesday 26 September, the European Commission announced that it has given the go-ahead for a second extension, this time until 31 January 2013, of the temporary €55 billion guarantee from France, Belgium and Luxembourg to the bank Dexia SA and its French subsidiary Dexia Crédit Local (DCL) to cover financing needs until a planned break-up of the bank is arranged.
An initial temporary guarantee of €45 billion was cleared in December 2011, which was extended on 31 May until 30 September in order for talks to continue between the three countries on a restructuring plan complying with EU state aid rules (see EUROPE 10625). On 6 June, the cap on the guarantee was raised by €10 billion to €55 billion (see EUROPE 10628).
Since then, the talks between Belgium and France on the sharing of the guarantee (Belgium has provided 60.5% and wants France to pay more than its 36.5%) have been dragging on, as have the talks between the European Commission and the three countries in question about state aid rules and the restructuring plan and (according to AFP reports) the speed at which Dexia's assets are to be sold off, whether it should be allowed to borrow more and the speed at which small businesses belonging to the bank are to be hived off. Hence the need for more time and an extension of the temporary guarantee so that agreement can be reached on a restructuration plan that complies with EU rules. This, says AFP, would enable Dexia to have permanent public guarantees of €90 billion for the period during which it is dismantled. (FG/transl.fl)