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EliScholar – A Digital Platform for Scholarly Publishing at Yale YPFS Resource Library 10-5-2011 France denies Dexia bailout will hurt state credit rating Agence France Presse https://elischolar.library.yale.edu/ypfs-documents2/2592  This resource is brought to you for free and open access by the Yale Program on Financial Stability and EliScholar, a digital platform for scholarly publishing provided by Yale University Library. For more information, please contact ypfs@yale.edu. Page 1 of 2 © 2023 Factiva, Inc. All rights reserved.France denies Dexia bailout will hurt state credit rating531 words5 October 201108:35 AMAgence France PresseAFPREnglishCopyright Agence France-Presse, 2011 All reproduction and presentation rights reserved.French officials scrambled Wednesday to defend their plan to save struggling Franco-Belgian bank Dexia,insisting it is an isolated event that poses no threat to the state's own credit rating.Dexia, which specialises in lending to local authorities, is faced with restructuring, and a French government fundand a state-run bank are preparing to step in to guarantee deposits and take over management of much of itsactivity.Coming at a time when the markets fear that many other French lenders are overexposed to risky Greek, Spanishand Italian sovereign debt, the Dexia move has increased fears about the overall stability of France's financialsector.A string of officials took to the airwaves to play down the fear, and to rebuff a warnings from Socialist formerprime minister Laurent Fabius that France "was caught by the throat" with it's prized AAA credit rating put indanger by the bailout."I find these suggestions very excessive and, to tell the truth, pretty inaccurate. The states won't be guaranteeingmore than they guaranteed a few years ago," central bank governor Christian Noyer said.Government spokeswoman Valerie Pecresse said Dexia's problems went back as far as 2007 and insisted therewas "no connection between Dexia and other French banks."France and Belgium had previously stepped in to help out Dexia in 2008, when it found itself in difficulty over itsexposure to US sub-prime debt."The Belgian and French states will put much less money into this operation than the British put into the RoyalBank of Scotland or Barclays," Noyer said, referring to operations that did not damage London's credit rating.Finance Minister Francois Baroin confirmed the Caisse de Depots, a state-run long-term investment fund, and theBanque Postale, the banking arm of the French post office, were readying an intervention."The board will announce its decision tomorrow," he said. "It's obviously the most serious option."Baroin also played down the scale of the intervention, and added that such guarantees to financial institutions arenot accounted for when calculating a government's public deficit.European Affairs Minister Jean Leonetti denied that Dexia's crisis could be the first domino in a chain that wouldtopple further French banks."Dexia has had problems from a long time. For the past 20 years there have been management problems. This isa very specific problem that has nothing to do with Greek debt," he said.But with the fall of Lehman Brothers in 2008 still fresh in memory, France had no choice but to bailout Dexia, saidJerome Cahuzac, chairman of the parliamentary finance committee.Page 2 of 2 © 2023 Factiva, Inc. All rights reserved."What is about to be proposed should settle questions over Dexia's financing," he said.ING researcher Mark Harmer noted that with its unraveling, Dexia "becomes Europe’s highest profile resolutioncase to date before it has a chance to morph into Europe’s Lehman."On Tuesday Dexia customers in Belgium withdrew 300 million euros ($400 million) from their accounts, accordingBelgian economic daily De Tijd, far less than amounts pulled out during the 2008 meltdown.burs-dc/arp/rlDocument AFPR000020111005e7a5005c1

France denies Dexia bailout will hurt state credit rating

https://elischolar.library.yale.edu/context/ypfs-documents2/article/3492/viewcontent/Agence_France_Presse___2011___France_denies_Dexia_bailout_will_hurt_state_credit.pdf

France denies Dexia bailout will hurt state credit rating

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