How nice. Dexia SA (DEXB)’s planned breakup to protect its Belgian depositors and its municipal-lending business in France may leave little value for its shareholders.
About 15 years after the French-Belgian bank was created in a merger and after about 100 billion euros ($133 billion) in public guarantees and funds kept the lender afloat in the 2008- 2009 period, France and Belgium are trying to split up its assets in a manner designed to avoid injecting more capital.
Under an option favored by France, Dexia SA may be left holding a “bad bank” with the lender’s worst assets, while Belgium assumes control of operations in that country and state entities in France buy up the French municipal-lending business, two people with knowledge of the plans said. Dexia’s market value has tumbled 42 percent in the past four days on concern shareholders will be the losers in a possible breakup.
“Whether or not this structure would benefit shareholders depends on the prices France and Belgium would pay for their national assets,” said AlphaValue Bank analyst Christophe Nijdam. “One should bear in mind that the two states are judge and jury as they are the majority direct and indirect shareholders of Dexia...”
Want to know more? Go to http://www.bloomberg.com/news/2011-10-05/dexia-breakup-may-make-shareholders-losers-holding-little-value.html
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