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France, Belgium set EUR 5.5 bn Dexia capital boost

08 November 2012, 11:01 CET
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(BRUSSELS) - France and Belgium agreed Thursday to inject 5.5 billion euros of fresh capital into bailed out lender Dexia, Belgian Finance Minister Steven Vanackere said.

The overnight agreement was reached by Vanackere and his French counterpart Pierre Moscovici and has already been given the green light by key ministers in the Belgian cabinet, a statement from Brussels said.

"It has been decided to raise Dexia capital by 5.5 billion euros ($7 billion), of which Belgium will take over 53 percent," Vanackere said.

Belgium's share would come out to about 2.9 billion euros.

Belgian authorities had previously mentioned a figure of five to 10 billion euros for the total recapitalisation amount.

Dexia began a programme to dismantle itself in late 2011 after needing a second bailout since the global economic crisis began.

On September 26, the European Commission agreed to extend until January 31 the temporary 55 billion euros in guarantees from France, Luxembourg and Belgium to allow the orderly dismantlement of the bank.

Paris and Brussels were keen to find an accord before Dexia publishes quarterly results early Thursday.

Negotiations turned out to be "difficult" because of disagreement over how to divide up the burden between the two countries, according to a source close to the case.

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