BRUSSELS: EU regulators gave approval yesterday to a bailout of bank Dexia, including a 5.5 billion euro ($7.27bn) capital injection by Belgium and France.
The executive European Commission waved through the restructuring of Dexia, once the world's largest municipal lender, which will be almost totally nationalised with a large part of its borrowing also supported by guarantees from Belgium, France and Luxembourg.
Dexia's shareholders last week accepted that France and Belgium would own almost 96 per cent of the group to avoid an immediate liquidation that board members warned could have caused a Lehman-style shockwave across Europe.
"As foreseen by our rules, the approved plan ensures that the continued market presence of some parts of the Dexia group is truly justified, without artificially keeping alive a failed business model, and that competition distortions resulting from the aid received are minimised," EU Competition Commissioner Joaquin Almunia said in a statement.
"...The plan brings the cost for the taxpayer down to the level strictly necessary to carry out the orderly resolution process," said Almunia, who as competition regulator oversees state aid schemes within the 27-member European Union.
Belgium bought the group's retail operations in the country, now known as Belfius, for four billion euros in October 2011, when Dexia was bailed out for a second time.
The Commission said Belgium had made adequate commitments to not distort competition in the banking and insurance markets where Belfius was active.
Belfius would also adequately contribute to the costs of its own restructuring, the Commission statement added.