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Dexia chairman, CEO resign after govt capital injection

Latest update : 2008-10-01

Dexia's chairman and CEO resigned on Tuesday, a day after the Franco-Belgian bank's shares lost almost a third of their value. Belgian, French and Luxembourg governments have agreed to inject 6.4 billion euros into the troubled bank.

View our special report on the financial crisis: "Global capitalism on the brink"


 Dexia chairman Pierre Richard and chief executive Axel Miller resigned on Tuesday, the French-Belgian banking group said after receiving a 6.4 billion euro state bailout.
   
The two tendered their resignations after "drawing conclusions from the current financial crisis and its impact on the Dexia Group," the company said in a statement.
   
"The board accepted their resignations and asked Messrs Richard and Miller to continue to look after the daily management until their successors have been appointed," it added.
   
Earlier Tuesday, the Belgian, French and Luxembourg governments agreed to pump fresh capital into the banking group, after its shares plummeted by nearly 30 percent on Monday.
   
Shares in Dexia, which had been suspended at the request of authorities most of the morning, surged over 10 percent once trading was resumed.
   
Dexia, whose corporate motto is "short term has no future", has run into trouble supporting its US bond insurer FSA, which has suffered from exposure to the slumping US mortgage market.
   
Under the bailout terms, various Belgian authorities and some big Belgian shareholders will contribute three billion euros to the rescue by subscribing to a capital increase, a statement from Leterme's office said.
   
The French government and the French state financial institution Caisse des Depots will add another three billion euros to the pot while Luxembourg will invest 376 million euros through a convertible loan.
   
In a conference call with journalists, Miller said that new shares were being issued at 9.9 euros under the capital increase.
   
Dexia was founded in 1996 as a merger of France's Credit Local and Belgium's Credit Communal. While it specialises in local government finance, it also has 5.5 million individual clients in Belgium, Luxembourg, Slovakia and Turkey.
   
On Sunday, the governments of Belgium, The Netherlands and Luxembourg had part-nationalised the leading Belgian bank, Fortis, as the shockwaves from the US financial crisis shook Europe.
   
The Benelux governments agreed to inject 11.2 billion euros into Fortis after it became the biggest European bank to be threatened by the US-born financial crisis.

Date created : 2008-09-30

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