Saturday, January 31, 2009
The Franco-Belgian bank Dexia has announced it will restructure and cut 3% of its staff after posting a €3 billion full-year loss.
Dexia says it will close operations in Australia, eastern Europe, Mexico and Scandinavia and reduce business in the United Kingdom and the United States. Dexia specialises in finance to local governments but also runs standard retail banking outlets in Belgium and France. It will cease proprietary trading as part of the restructuring.
The bank will sell its U.S. bond insurance arm Financial Security Assurance to Assured Guaranty. Dexia Banka Slovensko in Slovakia will be retained, as will the company’s Italian, Spanish and Portuguese public finance operations. In total, some 900 jobs will be lost.
Dexia will not pay a dividend or management bonuses this year, whilst board members have taken a 50% pay cut. The bank ran into trouble last year as a result of the failure of Lehman Brothers and the subsequent collapse of confidence in the banking system worldwide. The governments of France, Belgium and Luxembourg stepped in to guarantee the bank’s survival, although the bank was not nationalized, and the previous executive management was removed. The bank’s current chairman is Jean-Luc Dehaene, a former prime minister of Belgium.