Less than three months after Dexia SA (DEXB) got a clean bill of health in European Union stress tests, France and Belgium are considering a second bailout, moving the banking crisis from the continent’s periphery to its heartland.
“We’re seeing a practical example of contagion playing out,” said Jean-Pierre Lambert, an analyst at Keefe Bruyette & Woods in London, referring to Dexia’s “material exposure” to the debt of countries on the EU’s rim. “Investors aren’t quite sure what the sovereign debt losses will be, nor where the share price should be. They are concerned about the risks and reduce their funding.”
Dexia rose 6.7 percent to 1.08 euros by 12:15 p.m. in Brussels trading as European stocks advanced on speculation policy makers are examining measures to shield banks from the sovereign debt crisis. Dexia dropped 22 percent yesterday even after both the French and Belgian governments, which bailed out Dexia in 2008, pledged to support the bank.
Belgium’s biggest bank plans to pool its troubled assets into a “bad bank” with Belgian and French government guarantees to protect depositors and its municipal-lending business, Yves Leterme, Belgium’s prime minister, said yesterday…
Find out more at http://www.bloomberg.com/news/2011-10-04/dexia-rescue-moves-bank-crisis-from-europe-s-periphery-to-core.html
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