France and Belgium will step in to support the bank Dexia, the countries' finance ministers said today, as it saw a fifth of its stock market value wiped out in morning trading in Brussels.
France's Christine Lagarde noted that the Caisse de Depots state financial institution was a Dexia shareholder and would 'assume its responsibilities'. The Caisse des Depots holds 11% of Dexia's shares.
Earlier, her Belgian counterpart Didier Reynders had said Brussels was also ready to step in to help Dexia, following the partial nationalisation of the beleaguered Dutch-Belgian banking and insurance giant Fortis.
After sliding nearly 33% in early trading in Brussels, Dexia's shares were showing a loss of 24% in late morning trading, amid ongoing chaos on world financial markets following the recent credit crunch.
A spokeswoman for Dexia, which notably acts as banker for French local government, insisted that the group was in no immediate danger of collapse.
'Our liquidity is very good. Our group is very solid at the capital level,' she said. 'The situation is so exceptional on the markets that developments have to be constantly monitored,' she added, however.
