Dexia announces sell-off deal to assuage EU over bailout

(BRUSSELS) - Franco-Belgian bank Dexia, rescued by a major bailout during the 2008 crisis, has agreed to slash its operations by over a third over the next four years in order to get EU approval for the public aid.

"I'm delighted that there is a deal," with the European Commission, Dexia chairman Jean-Luc Dehaene told a press conference in Brussels, 10 months after the EU watchdog launch an enquiry into the joint bailout by the Belgian, French and Luxembourg governments.

"Looking to the horizon of 2014, the group's activities will be cut by around 35 percent," said chairman of the management board Pierre Mariani, sitting beside him.

The companies officials said assets and operations in Italy, Spain and Slovakia would be among those off-loaded.

In late 2008, at the height of the sub-prime crisis, France, Belgium and Luxembourg injected 6.4 billion euros into Dexia and pledged to guarantee its borrowings on the markets as its shares plunged during the worst credit crisis in generations.

EU Competition Commissioner Neelie Kroes, through a spokesman, expressed satisfaction at the bank's restructuring proposals, speaking of a "sufficient reduction in activities to redress the competition distortions," caused by the state aid.

The Dexia officials were keen to stress that operations in Belgium, where it is a major player, will continue.