Belgian Banks...Dexia, KBC falling apart?

One Belgian bank after another gets in trouble .....

1.
Dexia is the largest financial group, ranked 49th largest company in the world by Fortune 500 Global companies in 2010. It has over 35,000 employees and shareholders equity of almost EUR 20bn. Its origins go back to 1860 but rapid international expansion started in 1990.

In Sep 2008, the same bank was bailed out with a capital injection of EUR 6.4bn and with a state guarantee for a maximum of EUR 150bn. Chairman and CEO were sacked and ex Belgian PM was appointed and have been selling healthy parts of the bank ever since.

From Aa1 in 2008, the Groups ratings have been reduced to A1 (equiv from AA+ to A+ by S&P) and expect further downgrades despite the nationalisation.

Dexia also borrowed from US Federal Reserve an amount of USD 30bn in 2008.

Currently, Belgium's ratings itself are under review for a downgrade.

Dexia's share price continues to fall and now is at EUR 0.84, from EUR 3.07 in Oct 2010 and EUR 5.60 in Oct 2009 and EUR 5.43 in Oct 2008 and EUR 20.5 in Oct 2007.

Belgium to Buy Dexia's Local Consumer Bank for $5.4 Billion

By Rebecca Christie
    Oct. 10 (Bloomberg) -- Belgium agreed to buy the local consumer-lending unit of Dexia SA, ending a 15-year cross-border experiment with France after the European debt crisis deepened. The Belgian federal government will pay 4 billion euros ($5.4 billion) for the division and guarantee 60 percent of a
so-called bad bank to be set up for Dexia's troubled assets, Finance Minister Didier Reynders said at a press conference today in Brussels. The sale will cut Dexia's short-term funding requirement by more than 14 billion euros, the French-Belgian bank said in an e-mailed statement.

2.
Another large Belgian bank - KBC - just announced that they will sell their department of Private Banking to a Qatari investor under the name Precision Capital from Luxembourg. Qatar has been buying selective assets internationally quietly. Qatar is also rumuored to buy the Luxembourg branch of Dexia Bank, once details are finalised over the next few days.

KBC's stock price has declined from EUR 99 in Oct 2007 and EUR 50 in Oct 2008 to EUR 17 today Oct 10,  2011. Its share like most other European banks are banned from short selling at the moment.

Stay tuned....

BN 10/10 05:49 KBC Agrees to Sell KBL Private Bank Unit for 1.05 Billion Euros
BN 10/10 05:47 *KBC TO SELL PRIVATE BANKING UNIT TO PRECISION FOR EU1.05 BLN
BN 10/10 05:45 *KBC: PRECISION CAPITAL BUYS KBL EPB, KBC'S PRIVATE BANKING UNIT