After obtaining the green light from the European Commission, on 28 December 2012, Dexia Group will be able to proceed with its dismantling. The EU executive authorised Belgium, France and Luxembourg to grant aid for the orderly resolution of Dexia Group, the sale of its subsidiary DMA (Dexia Municipal Agency) and the restructuring of Belfius (ex-Dexia Banque Belgique).

The Commission concluded that, provided there is compliance with all commitments related to the group's orderly resolution, the restructuring of Belfius and the new development bank set up in France, the transactions are compatible with EU state aid rules, in particular because the residual group will pull out of the market altogether.

"This plan will allow the orderly resolution of the group. Belfius will refocus on its core banking and insurance business and DMA will be coupled to a new development bank structure in France, which will address market failures for the funding of the local public sector," explained Competition Commissioner Joaquin Almunia. "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. Finally, the plan brings the cost for the taxpayer down to the level strictly necessary to carry out the orderly resolution process," he added.

Since 2008, Dexia Group has received significant public support, authorised by the Commission in February 2010 subject to implementation of a restructuring plan. Dexia subsequently experienced further difficulties. When it became apparent that Dexia was unable to comply with its commitments and return to its long-term viability, Belgium, France and Luxembourg acknowledged the need for the group's orderly resolution.

The orderly resolution plan notified by these three member states to the Commission includes the sale of many of the group's entities and businesses as well as the winding down of the residual group. The Belfius entity was bought by the Belgian state and DMA will be coupled with a new development bank in France, in which the French state, the Caisse des Depots and Consignations (CDC) and Banque Postale, will participate. These measures involve additional aid, primarily a refinancing guarantee of 85 billion and a 5.5 billion recapitalisation for Dexia SA and DCL.

The Commission concluded that the measures are compatible...

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