PARIS (AFP) – Bailed out Franco-Belgian bank Dexia said on Friday it suffered a third-quarter loss of 1.54 billion euros (1.96 billion dollars) owing to the financial crisis.But it warned of a coming charge of about 1.5 billion euros from the sale of its FSA credit insurance unit, while noting with relief that the divestment had removed gross risk exposure totalling 500 billion dollars.
Dexia said losses directly linked to the crisis totalled 2.19 billion euros while revenue in the three months to September came to only 315 million euros.
It blamed some 482 million euros of losses on the collapse of US investment banking giant Lehman Brothers in September and said it aimed to reduce costs by 15 percent over the next three years in a restructuring programme.
But chief executive Pierre Mariani told a press conference that the sale of the bank's bond insurance subsidiary FSA to US credit insurer Assured Guaranty, concluded on Friday, would show a capital loss of about 1.5 billion euros.
This would feature in the results for the fourth quarter.
"We have just removed a big shadow over the bank," he said. "Now we have got away from American risks in what I consider to be satisfactory conditions."
He said that FSA had represented "more than 500 billion dollars of (risk) exposure," before the sale.
The bank specified that the sale of FSA did not involve financial product activities covering all of its most risky financial instruments, now covered by French and Belgian state guarantees which extended to a portfolio of risks totalling 16.5 billion dollars.
Before the sale of FSA, the French state had extended guarantees of 55 billion euros and Belgium of about 90 billion euros.
Dexia is selling FSA for 722 million dollars, of which 361 million dollars is in cash and the rest in shares in Assured Guaranty.
Dexia will end up owning 24.7 percent of Assured Guaranty which is one of the credit risk insurers which has weathered the crisis in this sector relatively well.
Dexia, without specifying if there would be job losses, said it had already identified cost savings of 300 million euros and saw significantly more in 2009.
For the fourth quarter, Dexia warned that its results would suffer again but insisted that its capital base was solid.
Dexia has struggled badly in the financial crisis, especially since the Lehman Brothers' collapse, and had to be bailed out by the French, Belgian and Luxembourg governments to the tune of 6.4 billion euros.