Dexia bank \'needs urgent recapitalisation\'

The Franco-Belgian bank Dexia is losing money and will soon be in need of recapitalisation, according to its chief executive, quoted in Belgian newspapers on Saturday. \"Everyday that passes brings us nearer to the outcome, because Dexia is continuing to lose money,\" Karel De Boeck, the bank\'s CEO told l\'Echo and De Tijd. \"So we are working on an increase in capital,\" he said. \"The governments are working on it, as are the national banks and Dexia.\" \"We are looking at different models,\" he added saying he could not be more precise. \"I don\'t know if it will be before the end of the year or the beginning of 2013.\" He also did not indicate the amount of the recapitalisation. According to l\'Echo the Belgian authorities have mentioned a figure of between 5 billion and 10 billion euros. In early August Luc Coene, governor of the National Bank of Belgium, said that Dexia could soon need a recapitalisation after losing 1.2 billion euros in the first three months of the year. \"We are working on either a recurring annual increase or a \'one-shot\' operation,\" he said. \"We are also looking how Eurostat will treat the operation according to the different scenarios.\" L\'Echo said that Belgium, with France, would be the only contributor to the recapitalisation, which could have major implications for the government\'s budget and its debt. If Eurostat, the European Union body responsible for compiling statistics, considers the intervention to be government spending Belgium will have to adopt economy measures to comply with EU budgetary norms. Dexia began a programme to dismantle itself in late 2011. On Friday it announced the sale of its Luxembourg unit for 730 million euros ($950 million) to a Qatari group after an associated capital increase of 204 million euros. Dexia struck a deal in April to sell 90 percent of Banque Internationale a Luxembourg (BIL) to Qatari investment group Precision Capital, owned by the Al Thani family and the Grand Duchy of Luxembourg. Last week it sold its Turkish subsidiary DenizBank to the Russian Sberbank for a sum close to 3 billion euros. It has cut 312 of the 1,100 jobs in France as part of a reorganisation of its local activities. On September 26 the European Commission agreed to the extension until January 31 of the temporary 55 billion euro guarantee from France, Luxembourg and Belgium to allow the orderly dismantlement of the bank. Belgium, which accounts for 60.5 percent of the guarantee compared with France\'s 36.5 percent and Luxembourg\'s 3.0 percent, would like France to undertake a larger share of the burden.