BANKING: France and Belgium to prop up Dexia with ‘bad bank’ scheme

BRUSSELS/BERLIN – Germany signaled on Wednesday it was ready to back plans for the European Central Bank to be made the chief supervisor of banks, raising the prospect of a breakthrough on the European Union’s most ambitious financial reform. Finance Minister Wolfgang Schaeuble told the German cabinet he was “optimistic” about a deal ahead of a meeting of EU finance ministers in Brussels on Wednesday, a German official said, speaking on condition of anonymity.

Fitch Ratings agency on Tuesday kept Dexia's debt rating intact but downgraded the credit score of the banking group's Belgian unit after France and Belgium rescued the lender from collapse.Fitch affirmed the Franco-Belgian group's long-term debt rating at "A-plus" and cut the credit score of Dexia Bank Belgium by one notch to "A".The international ratings agency said its actions follow the restructuring of Dexia that was announced on Monday.

Fitch Ratings agency on Tuesday kept Dexia's debt rating intact but downgraded the credit score of the banking group's Belgian unit after France and Belgium rescued the lender from collapse.Fitch affirmed the Franco-Belgian group's long-term debt rating at "A-plus" and cut the credit score of Dexia Bank Belgium by one notch to "A".The international ratings agency said its actions follow the restructuring of Dexia that was announced on Monday.

The French and Belgian governments will "step in if necessary" to bailout French-Belgian bank Dexia, Belgium's finance minister Didier Reynders said Tuesday, amid rumours of a break-up after emergency boardroom talks.The bank's shares lost more than 10 percent on Monday on warnings of an imminent credit rating downgrade and wider fears of bank exposure to eurozone sovereign debt.Reynders discussed the bank's problems during a meeting with French counterpart Francois Baroin on the margins of eurozone talks in Luxembourg.

Belgium approved Tuesday the creation of a "bad bank" to house assets at risk at the Franco-Belgian bank Dexia, whose financing the two countries had guaranteed on reports that it was to be broken up."There was an agreement to isolate past charges, coupled with a need for guarantees from the Belgian and French states in order to guarantee the activities of Dexia Bank Belgium," Prime Minister Yves Leterme said after a meeting with his key cabinet ministers.

BRUSSELS (Reuters) - Franco-Belgian bank Dexia is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, underlining the difficulties the bank is having in tapping funds.

Belgium will take total control of the local arm of the troubled Franco-Belgian bank Dexia, Prime Minister Yves Leterme said Monday after a cabinet meeting in Brussels.Leterme said the move would "make secure" the retail bank inside Belgium and free it from "any risks resulting from the environment within parent body Dexia SA".Finance Minister Didier Reynders said his government had offered four billion euros for Dexia Bank Belgium, an amount he said was "reasonable".