Dexia Wind Down Could ‘Endanger’ Banking System
The directors of Dexia have warned that shutting down the Franco-Belgian lender too quickly could endanger the European financial system.
by Harry Wilson, Banking Correspondent
Telegraph.co.uk
The directors of Dexia have warned that shutting down the Franco-Belgian lender too quickly could endanger the European financial system.
In a message to shareholders, Dexia’s board said that forcing the bank to rapidly sell off assets could crystalise losses it cannot afford to take.
Dexia said that if this were to happen it would likely default on its debt, which it said could cause a new European banking crisis.
“Such a default would jeopardise the stability of the whole European financial system. Indeed, a default of the Dexia group would lead to assets being frozen in the short term and would affect the liquidity of the markets, with a significant risk of a spill-over effect to the rest of the eurozone, given the size of the group’s balance sheet,” said the bank.
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2012-11-22 02:02:45
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