EU clears latest Dexia bank restructuring plan

The European Commission approved Friday the latest, 90-billion-euros restructuring plan for Dexia, the Franco-Belgian bank bailed out at the height of the financial crisis and struggling ever since. The Commission said the plan will allow the core banking business to be wound up while the remaining assets -- a development agency in France and the Belfius unit in Belgium -- will be put on a sound base. "I am happy to finally be in a position to approve the resolution plan of Dexia," EU Competition Commissioner Joaquin Almunia said in a statement. The plan, drawn up by major shareholders Belgium and France, along with Luxembourg, includes state guarantees worth 85 billion euros ($110 billion) and fresh capital of 5.5 billion euros. With the main group closed down, Belfius, now owned by the Belgian state, will focus on its core banking and insurance business while Dexia Municipal Agency will be folded into a new development bank in France to provide local government funding. "The approved plan ensures that the continued market presence of some parts of the Dexia group is truly justified ... and that competition distortions resulting from the aid received are minimised," Almunia said. "Finally, the plan brings the cost for the taxpayer down to the level strictly necessary to carry out the orderly resolution process," he added. 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.