Almunia recommends latest Dexia restructuring

(BRUSSELS) - EU Competition Commissioner Joaquin Almunia said Thursday he would recommend that the European Union approve next week the latest bank guarantee accord for bailed out Franco-Belgian lender Dexia.

Almunia said he would ask the European Commission to "approve the additional resolution measures" on Friday next week, allowing the winding up of the "biggest bad bank in the EU" with assets of some 300 billion euros ($400 billion).

It was most important that Dexia be restructured in an orderly fashion, he said, with the agreed 85 billion euros in state guarantees judged compatible with EU state aid guidelines.

He said the latest accord involved the minimum aid required and would limit distortions to competition while ensuring that the surviving entities would be viable.

In early November, France and Belgium agreed to inject 5.5 billion euros of fresh capital into Dexia to keep it afloat during its restructuring after the bank had to be bailed out first in 2008 and then again in 2011.