Through its affiliate, Dexia Crediop, the Dexia group has an exposure of 27.4 billion euros in Italy. The amount which represents 16% of its entire exposure. The statement was made by the Franco-Belgian group the day after the constitutional referendum in Italy.
Italians rejected by a net majority the institutional reform projects of Matteo Renzi, who in the wake of events presented his resignation, giving way to a period of political instability in Italy.
There is a possibility that financial markets will suffer a prolonged political crisis in Italy, which would make the country’s banking sector even more fragile.
Italian Dexia exposure divided in in public and private debt. With 14.4 billion euros related to the country’s public debt and 11.2 billion euros attributable to the debt of local Italian enterprises.
“Given the nature of its counterparts in Italy, the impact on Dexia’s credit risk should remain limited,” estimated the group, which emphasized that it will however be “sensitive to variations in credit margins (spread), which affect the value of assets and ultimately the related AFS reserve.” The group mentioned that it may also be “affected by a scenario of contagion of other European countries.”
Dexia has stated that is has maintained “a prudent approach” and a liquidity reserve which is currently at 19 billion euros. Subjected to an orderly restructuring process, Dexia is 94.4% owned by the States of Belgium and France. The group generated net profits of 309 million euros in the third quarter of this year but results vary greatly from one quarter to the next.
Oscar Schneider (Source: Belga)