Home Uncategorized Franco-Belgian Dexia reveals profit amid EU state-aid negotiations

Franco-Belgian Dexia reveals profit amid EU state-aid negotiations

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Franco-Belgian bank Dexia, the target of a major bailout late last year, announced a 274-million-euro net profit for the first quarter on Friday after losses of 3.3 billion euros for 2008.

The figures compared to a loss of more than 1.5 billion euros (2.25 billion dollars) for the corresponding three-month period last year.

And they enabled the bank — deep in restructuring negotiations with Brussels — to argue it had already “considerably reduced” its risk profile.

Citing “sizeable” progress since the disposal of troubled US bond insurance subsidiary Financial Security Assurance, chief executive Pierre Mariani’s comments were clearly aimed at the European Commission, eight months into a state-aid probe.

In August, the commission said it had “reservations” over the bank’s restructuring plans, but chairman Jean-Luc Dehaene insisted that talks were progressing in an “open and constructive climate.”

Dexia, which posted third-quarter income of 1.37 billion euros, was yellow carded by the commission last month for announcing to markets the early repayment of debt without first alerting European competition authorities.

However, in a statement Mariani stressed that the bank had “confirmed its profitability with a third consecutive positive result, thanks to the good performance of its core activities and to the magnitude of its restructuring plan.”

Belgian banking and insurance group KBC meanwhile announced a second quarterly net profit running, and said it too was entering the home straits in its own negotiations over restructuring with the commission.

It posted net profits of 528 million euros for the third quarter, up from 302 million euros between April and June and a dramatic turnaround from cumulative losses of seven billion euros at the height of the crisis between July 2008 and March 2009.