Belgian Cabinet Approves "Bad Bank" To Assume Dexia’s Risky Assets

The Belgian government has announced that it has approved the creation of a "bad bank", to assume risky financial assets of the Franco-Belgian bank Dexia, AFP reported.
Dexia is being split. The new bank to assume the risky assets will be able to receive French and Belgian state security, BTA wrote.
"Agreement has been reached in the government to isolate the burden of the past and possibly give a state guarantee from Belgium and France on the activities of Dexia," said Belgian Prime Minister Yves Leterme yesterday after meeting with key ministers.
"Everything that concerns the past, especially long-term loans to local authorities will be guaranteed by the two countries," said Finance Minister Didier Reynders.
"These are assets that will be held for very long, something probably only the state can manage," Reynders said, noting that the term "bad bank" was not very suitable.
The aim is to isolate a portfolio of risky assets amounting to EUR 95 billion, Dexia has been trying to get rid of for years because it aggravated its work.
According to publications in the Belgian and French press, the bank which three years ago managed to avoid bankruptcy, with the support of the Governments of Belgium, France and Luxembourg, is now close to the point to be declared the first European bank, the victim of the debt crisis. Dexia has bought a substantial part of Greece's public debt and this is the main reason for its current difficulties.