Dexia, Franco-Belgian Bank, Using Emergency Liquidity Facilities To Tackle 'Very Dramatic' Problem

BRUSSELS (Ben Deighton) - Franco-Belgian bank Dexia (DEXI.BR) is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, as analysts described its liquidity situation as "very dramatic."
The source said the bank was making use of the Emergency Liquidity Assistance (ELA) facility of the Belgian central bank as well as "national central banks in France, in Spain, in Italy," where Dexia has units.

One analyst said the fact Dexia was tapping national central banks' liquidity via the European Central Bank network showed how bad the situation had become for the lender.

"The emergency window of the ECB ... is very expensive, so it shows that the liquidity situation is very dramatic," the analyst said, speaking on condition of anonymity.

"At some point you run out of unencumbered assets to post at the ECB, and then the only way to fund yourself is via the ELA, which is clearly not a good sign," the analyst said.

Dexia and the central banks of France and Belgium both declined to comment.

The source added that Dexia would try to raise money on markets again after the finalization of a 90 billion euro ($120 billion) guarantee scheme agreed in October by France, Belgium and Luxembourg.

Belgian Finance Minister Didier Reynders said Wednesday that he hoped to reach an agreement with the European Commission about the restructuring plan for Dexia (DEXI.BR) in the coming days.

($1 = 0.7490 euros)

(Additional reporting by Dan Flynn in Paris; Editing by Luke Baker and Will Waterman)

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