Belgium: We will not foot bank bill

BELGIUM has warned France that it was not willing to foot the whole bill for rescuing Dexia as the two states started talks to divide up the Franco-Belgian lender’s assets.

Dexia, whose shares were suspended yesterday, confirmed its board would meet in Paris on Saturday to vote on a break-up plan after Belgium and France pledged to guarantee its financing in the face of a dramatic share-price slide.

Belgian caretaker prime minister Yves Leterme told RTL radio that Belgium wanted a fair sharing of the burden. The French finance ministry did not give a reaction.

Mr Leterme’s comments were echoed by Belgian finance minister Didier Reynders, who said Belgium did not want the full cost burden of saving, and possibly nationalising, Dexia’s Belgian banking arm as well as supporting a “bad bank” of assets left over from Dexia Group’s past business.

Belgium is probably mindful of the rescue of Dutch-Belgian bank Fortis three years ago when, within a week of a capital injection, the Dutch abruptly nationalised their part of the bank, leaving Belgium to clear up the remaining mess.

Belgium provided 60% of the €150 billion of state guarantees Dexia secured in 2008 to cover its borrowing.

However, sources said the two might settle for a 50:50 split to cover the bad bank assets, as this might be the maximum Belgium could afford.