Belgium, France and Luxembourg rushed on Tuesday to provide nearly 6.4 billion euros (9.2 billion U.S. dollars) to save Franco-Belgian bank Dexia, the latest victim of the global credit crunch in Europe.
Belgian Prime Minister Yves Leterme said after all-night negotiations that the Belgian government and other stakeholders would invest three billion euros in Dexia, the French government one billion euros and French state-controlled Caisse des Depots (CDC) two billion euros.
Luxembourg would also invest 376 million euros in Dexia, the world's biggest lender to local governments which is based both in Brussels and Paris.
"This is done to make Dexia able to cope with what is going on in the financial markets," Leterme said in Brussels.
Dexia, which employs about 35,000 people in more than 30 countries, ran into trouble with its U.S. bond insurance unit Financial Security Assurance Inc. (FSA) which was hit hard by the subprime mortgage crisis. It closed nearly 30 percent lower Monday.
Dexia's CEO Axel Miller, who will leave together with Chairman Pierre Richard once replacements are found, said the bank had no choice but to ask for help from the governments.
Dexia was the second Belgian bank this week to get public bailout. This came only two days after Belgium, the Netherlands and Luxembourg agreed to inject 11.2 billion euros to save Belgian-Dutch bank Fortis on Sunday.
Source: Xinhua
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