Belgium, France and Luxembourg have agreed to inject €6.4 billion into the troubled Franco-Belgian bank Dexia, Belgian Prime Minister Yves Leterme.
The injection of capital, reached after a long night of negotiations, is intended to reassure the stock markets after Dexia shares plummeted by nearly 30% yesterday. Under its terms, Belgium will invest €3 billion in Dexia.
The French government and the French state financial institution Caisse des Depots will add another €3 billion while Luxembourg will invest €376m through a convertible loan. Dexia was founded in 1996 as a merger of France's Credit Loca and Belgium's Credit Communal.
While it specialises in local government finance, it also has 5.5 million individual clients in Belgium, Luxembourg, Slovakia and Turkey.
On Sunday the governments of Belgium, The Netherlands and Luxembourg had part-nationalised the leading Belgian bank, Fortis, as the shockwaves from the US financial crisis shook Europe.
