One notch cut for Dexia banks

One notch cut for Dexia banksThe core banks of Franco-Belgian financial group Dexia were downgraded one notch by Standard and Poor’s on Friday.

The ratings agency cited difficulties in securing wholesale funding and the need for increased collateral.


The ratings agency also said it could take further action, including further downgrades or even an upgrade, depending on how a proposed restructuring panned out.

The board of Dexia, whose shares are suspended, will meet in Paris on Saturday to vote on a break-up plan after Belgium and France pledged to guarantee its financing in the face of a share-price slide.

“We expect to resolve the CreditWatch placement once we have more information about what the restructuring means for Dexia’s operating banks and more details about accompanying support that the French and Belgian governments could provide,” S&P said in a statement.

“We could raise the ratings on some of Dexia’s operating banks if separation from the group would strengthen their financial profiles or result in greater parent or government support,” said the agency.

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