Dexia Shares Halted In Advance Of Substantial Loss, Asset Disposition Announcement

Tyler Durden's picture

Update 2: DEXB.BB reopen 0.5% lower than prehalt.

Update: DEXB.BB to resume trading at 1340 CET according to the market regulator

Two days ago Zero Hedge revealed that "someone" may know something is fishy in Belgium's biggest bank Dexia, after two of the biggest investors in the bank's recent €3.2 billion FRN issuance decided to put their portion back to the bank. Sure enough, less than 48 hours later, the company's shares were halted, without much information, and it was subsequently revealed that the bank would book a multi-billion loss on asset sales, as a result it would accelerate the sale of non-core assets, and would divest its financial products portfolio. As a result of the €3.6 billion charge, "The second-quarter provision to cover future losses will reduce Dexia’s
Tier 1 ratio, a measure of the bank’s ability to absorb losses, to about
11 percent from 13.4 percent at the end of March, the bank, based in
Brussels and Paris, said today in an e-mailed statement
." Once again, we see efficient markets in action. Luckily for Blackrock and Barclays, the market was just a little more efficient for them than for everyone else. And to anyone who dipped into Dexia protection as per our suggestion, now may be a good time to take some profits... or not. After all the last thing the bank needs now is to have to raise even more cash to meet the put demands, which are likely set to surge across all bond issues that have this investor-friendly option.

From Bloomberg:

Dexia SA (DEXB), the French-Belgian bank forced to shrink its balance sheet by 35 percent by 2014, said it will take a charge of 3.6 billion euros ($5.1 billion) for the anticipated sale of mostly U.S. residential mortgage-backed securities and long-term bond disposals.

The second-quarter provision to cover future losses will reduce Dexia’s Tier 1 ratio, a measure of the bank’s ability to absorb losses, to about 11 percent from 13.4 percent at the end of March, the bank, based in Brussels and Paris, said today in an e-mailed statement. That ratio will increase to at least 12 percent by the end of this year, Dexia said.

Dexia is using the surplus capital accumulated over the past two years to accelerate the reduction of its balance sheet, which had slipped behind the targets agreed with the European Commission, and cut risks linked to the evolution of the U.S. housing market. The bank anticipates it will sell the asset- backed securities in the FSA Financial Products portfolio and most of the bonds before June 2012, reducing its need for short- term funding by an additional 20 billion euros.

“The provision is split evenly over the FSA portfolio and the bond portfolio,” Chief Executive Officer Pierre Mariani said on a conference call with reporters today. “This provision will give us more visibility on future profits.”

By writing down the U.S. asset-backed securities to their market value, Dexia said it will be in a position to waive the Belgian and French state guarantees covering losses on those assets and renegotiate the terms and consequences arising from the state support.

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Lord Welligton's picture

“The Franco-Belgian group will announce today the acceleration of its programme of asset disposals. While the European Commission had given it until the end of 2014, Dexia has decided to carry out the essential parts this year…”

“With assets of over EUR 50 billion being managed in Dublin alone, Dexia has put in place a strong team of financial market specialists to control the portfolios, not just for the Dublin office, but on behalf of Dexia on a worldwide basis. Investment centres in New York, Singapore and Berlin are coordinated and managed through the Portfolio Management Group, PMG in the Dublin office.”


MisterAmbassador's picture

This isn't really relevant, but it's genius and definitely worth listening to.  I couldn't sleep and came across this interview with Gerald Celente.

Have you noticed how difficult it is to get many people to actually listen to the truth?

Celente sums it up perfectly at about minute 7:30.  He calls it the new trend of "I don't want to know."

Why people don't wanna know?  Because conservatives believe, and liberals lie.


Have a good day, everyone.

Lord Welligton's picture

He calls it the new trend of "I don't want to know."

Will have a look.

Though I think for many people it is all to complicated. Deliberately made so by their leaders.

Most people have their fingers crossed hoping that everything will be ok in a couple of years.

Their leaders are happy to encourage this by saying that the debt is "manageable".

Nobody really wants to face the truth.

Duuude's picture


Luckily for Blackrock and Barclays, the market was just a little more efficient for them than for everyone else...


Paging Inaction Jackson...


Ah Fuggedaboudit...


Paging Chuck Jones...We have a call from Rod...


MisterAmbassador's picture

Good points.  Leaders definitely point fingers and kick the can down the road as far as they can.

He goes on to say that he's actually had some people unsubscribe from his newsletters and gives an example of someone who says they are tired of reading about all the bad things in the world and none of the million good things for every bad thing.

And, your conclusion is spot on - once most people realize that there really is no solution to our economic problems or, even the reactor problems in Japan, they tune out.  In fact, the media hardly even talk about Japan's problems anymore.  It's really quite incredible and incredibly sad - the complacency.

Urban Redneck's picture

It's Groundhog Day in Punxsutawney (AGAIN!)

bigdumbnugly's picture

 i haev alwyas had disdexia, even mroe now.

nmewn's picture

I hear they're giving out free "stress tests" ;-)

monkeys.pick.bottoms's picture

Is this the moment when the floor falls off Europe and all the fun begins?

oogs66's picture

the big problems for banks always start when short term funding dries up.  Not quite there, but heading in that direction.  and guess you can replace banks with countries too.

Paralympic Equity's picture

I am very interested in seeing where will the proceeds from the sales go (short term debt) and how much was the total sale.

How are the going to sell 35% of 560 billion EUR assets till 2014?

Didn't Rehn say that Greece was unlikely to sell 50 billion of assets in 4 years?

Captain Planet's picture

so, dexia is going to have to take losses on both insolvent local belgian towns, and the tract-home toxic poop out of ireland too?

seems like those who know their time is up, if they are looking for the exit, are going to go through the pain now.

iceland comes to mind. imho, icelandic govt. whistleblowers will earn a place in the history books as the first western country to get outa dodge

and just to say f*ck you, here's some more volcanic ash.

grounded bitchez

feeb's picture

OT - but when eating at Ted's Montana Grill the other day and researching a bit about Mr. Turner online, I discovered that the Captain Planet program was a Ted Turner (propaganda) creation. Earth...Fire...Wind...Water...Heart! Go Planet!

Scary to think how this admittedly creepy blue superhero from my youth was all Turner's doing.

Hephasteus's picture

Blackcrock can pay for this from all it's winning at commercial realestate in japan seminars.

max2205's picture

Mushroom cloud?

Troy Ounce's picture



Yeah, firesale

Yeah, balance sheets

Yeah, bankruptcies

Yeah, derivatives

Yeah, dominos

Yeah, entitlements

Yeah, burning parliaments

Yeah, PM

Yeah, tv, beer & chips

Yeah, Stone Street Advisors explaining this shit ;>(

virgilcaine's picture

It's a tough time to be insolvent.  Today I shall buy some Belgian chocolate in their honor.

Sudden Debt's picture

don't forget the beer to ;)



williambanzai7's picture

As usual, this happens going into a weekend.

Luckily Justin Bieber will be addressing the G8 and Debtbama is there to lead in the planning.

Sudden Debt's picture

The real news is that the government wants to get rid of it's stake in Dexia AS FAST AS POSSIBLE!!

The rest of the news is just smoke and mirrors.



Idiots can buy the dip... 


Next up: Hundreds of funds will get a suckerpunch hit from Dexia!

Global Hunter's picture

3.6 billion euros?  This is 2011 we deal in trillions now get with the program!

Sudden Debt's picture

In Belgium there live 10 million people of which 3 million work of which 1.7 million work for the government.

If you would compare it to the US, do everything X 35.

It would be like BAC or C needing another 100 billion.

In their first plea. That mostly means we're going to tripple that number anytime soon.

Dolemite's picture

Nasdaq in a great place for a sell entry

slaughterer's picture

Did Fitch, Moody's or S&P have a downgrade on Dexia at all before the Blackrock/Barclays maneouvre?

camoes's picture

Used to live in Lux just next to one of the Dexia's main office buildings...I would walk to work the opposite way the same time Dexia employees arrived, they all looked like drones and clueless

LawsofPhysics's picture

Let the running of the banks begin!

Dick Darlington's picture

Remember to check out DEXMA public sector covered bonds. Quite impressive "asset pool" with nice little exposure to the periphery.

unununium's picture

Dexia=Domino, or just another community bank failure?  Depends on how may CDS are written against it.

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