The amount guaranteed for the Dexia group by Belgium, France and Luxemburg will be less than 65 billion euros by the end of the month, the CEO Karel De Boeck announced on Thursday. The amount, which is not expected to go up, is around 20 billion less than the maximum put aside to save the institution in autumn 2011. During the shareholder’s assembly last year, Mr De Boeck was planning on 40 to 45 billion euros of public guarantee. Low interest rates, and recent changes in the Swiss franc/euro exchange rate, decided otherwise. It led to them needing more “collateral cash”, meaning deposits Dexia gave to its counterparts as a guarantee for exchange contracts (swaps). The group, which needed cash, had to raise extra money by using part of some of these guarantees.
“The amount of “collateral cash” went up by around 10 billion euros last year, and is expected to go up a further five billion this year. In total, we’re talking 35 to 36 billion euros, as much as a few years ago”, says the bank’s boss. The State guarantees will go up to 45 billion euros if “collateral cash” returns to its normal level.
For 2014, the group’s recurrent net profit was -248 million euros. Mr De Boeck is optimistic for 2015, but refuses to commit to a figure. In the long term, the goal is to become profitable in 2018, despite historically low rates. “We are readjusting our long term plan every six months. The low rates are a bad thing for us (costing Dexia 100 million euros a year), whereas low spreads are a good thing”, says Karel De Boeck.
The Dexia CEO also said that no decision has yet been made about the group’s listing on the stock market. They expressed their wish to be taken off the stock market last year, as it is too expensive for Dexia.