A financial institution , sometimes called a banking institution , is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial institution:
45-510: Dexia N.V./S.A. , or the Dexia Group , is a Franco-Belgian financial institution formed in 1996. At its peak in 2010, it had about 35,200 members of staff and a core shareholders' equity of €19.2 billion. In 2008, the bank entered severe financial difficulties and received taxpayer bailouts for €6 billion, and it became the first big casualty of the 2011 European sovereign debt crisis . Due to big losses, suffered among others from
90-508: A financial crisis in a Europe-wide stress test, reducing the chances of it needing further state aid. The ECB had already acknowledged Dexia's "specific situation", with an assessment of its finances carried out over its 2011 wind-down plan. That EU-approved plans makes Dexia unique among the 128 major euro zone banks being reviewed by the European Central Bank (ECB) and the 124 EU banks that are being subjected to stress tests by
135-510: A gas pipe line in Myanmar and the BTC pipe line through Turkey, Azerbaijan and Georgia. In 2005 Dexia announced a new policy concerning the weapons industry. Companies involved in the production of anti-personnel mines will be completely barred from banking services. For investment funds there is no limitation of investments in the weapons industry. Dexia did on the other hand rank 17th in 2011 on
180-583: A heavily regulated environment because they are critical parts of countries' economies, due to economies' dependence on them to grow the money supply via fractional-reserve banking . Regulatory structures differ in each country, but typically involve prudential regulation as well as consumer protection and market stability. Some countries have one consolidated agency that regulates all financial institutions while others have separate agencies for different types of institutions such as banks, insurance companies and brokers. Countries that have separate agencies include
225-578: A maximum bonus of €1.8 million. Within Dexia Crédit Local, the French component of Dexia group, a pool of €8 million was dedicated to the bonuses of the leading managers, mainly directors. The management indicated that the sum would be shared among 400 to 765 employees. Philippe Rucheton , the financial director appointed by Dexia in April 2009, coming from Société Générale , received
270-462: A multi-billion loan to troubled German bank Depfa . The price of the Dexia share, having peaked above €20 in the previous years, but gradually fallen to around €10, dropped in one day to €6.62. The next day the rating agency Moody's downgraded Dexia's long term debt and deposits ratings from Aa1 to Aa3, and downgraded the individual banks' strengths to C− ("adequate intrinsic financial strength") with
315-471: A negative outlook. Dexia was quickly forced to apply for a taxpayer bailout. This support was assured within days, taking two forms: The three states have the potential to make a profit from their intervention: Since Dexia had a New York banking office they were eligible for various bailouts from the US Federal Reserve. At its peak Dexia had borrowed $ 58.5 billion. On 30 September 2008
360-608: A possible breakup, with a plan to place its "legacy" division into a bad bank with government guarantees. On 10 October, it was announced that the Belgian banking arm will be purchased for €4 billion by the Belgian federal government. Some units such as DenizBank and the Luxembourg retail bank will be put up for sale. Part of its French operations are likely to be purchased by Caisse des dépôts et consignations and La Banque Postale . The remaining troubled assets, including
405-559: A prompt resolution of a distressed situation. Corporate debt restructuring is the reorganization of companies' outstanding liabilities. It is generally a mechanism used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over a longer period with smaller payments. This can better allow the company to meet its debt obligations. Also, as part of this process, some creditors may agree to exchange debt for some portion of equity. Working with companies in this way in
450-471: A timely and transparent manner may go a long way to ensure their viability, which is sometimes threatened by internal and external factors. The restructuring process attempts to resolve the difficulties faced by a corporate body and enable it to become viable again. Steps: In corporate restructuring, valuations are used as negotiating tools and more than third-party reviews designed for litigation avoidance. This distinction between negotiation and process
495-600: A trend toward homogenisation of financial institutions, meaning a tendency to invest in similar areas and have similar business strategies. A consequence of this might be fewer banks serving specific target groups, and small-scale producers may be under-served. This is why a target of the United Nations Sustainable Development Goal 10 is to improve the regulation and monitoring of global financial institutions and strengthen such regulations. Standard Settlement Instructions (SSIs) are
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#1732790938619540-597: A welcome bonus of €500,000. In 2010 Dexia announced its plan to provide CEO Pierre Mariani with a bonus of €600,000. For Jean-Luc Dehaene a remuneration was planned of €88,000. The allotment of high bonuses at Dexia and competitor KBC caused some commotion in Belgium. Leading the city of Ghent to remove some €30 million in short term investments from Dexia and KBC. Financial institution Financial institutions can be distinguished broadly into two categories according to ownership structure: Some experts see
585-499: A €95 billion bond portfolio would remain in a "bad bank" that would receive funding guarantees of up to €90 billion provided by the governments of Belgium (60.5%), France (36.5%) and Luxembourg (3%). On 27 July, Dexia confirms the sale of its 50% share in RBC Dexia Investor Services. The business moves under the sole ownership of Royal Bank of Canada (RBC) and is renamed RBC Investor Services . In
630-464: Is a difference between financial restructuring and corporate finance . From the point of view of transfer pricing requirements, restructuring may entail the need to pay the so-called exit fee (exit charge). See Valuation (finance) § Valuation of a suffering company for discussion of the approaches taken. Historically, European banks handled non-investment grade lending and capital structures that were fairly straightforward. Nicknamed
675-497: The Financial Supervisory Authority of Norway , Germany with Federal Financial Supervisory Authority and Russia with Central Bank of Russia . Merits of raising funds through financial institutions are as follows: Restructuring Restructuring or Reframing is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for
720-534: The Supreme Court on the legality of leasing contracts, in which contracts were considered invalid for married couples of which both partners had not signed the contract. Dexia as a consequence had to repay these debts plus accrued interests. Luckily for Dexia many customers had previously agreed to a less favourable Duisenberg-agreement and could not revoke this. Eventually only 3,000 of the hundreds of thousands of Legiolease customers profited from this ruling of
765-880: The United States , where the key governing bodies are the Federal Financial Institutions Examination Council (FFIEC), Office of the Comptroller of the Currency – National Banks, Federal Deposit Insurance Corporation (FDIC) State "non-member" banks, National Credit Union Administration (NCUA) – Credit Unions, Federal Reserve (Fed) – "member" banks, Office of Thrift Supervision – National Savings & Loan Association, State governments each often regulate and charter financial institutions. Countries that have one consolidated financial regulator include: Norway with
810-495: The "London Approach" in the UK, restructurings focused on avoiding debt write-offs rather than providing distressed companies with an appropriately sized balance sheet. This approach became impractical in the 1990s with private equity increasing demand for highly leveraged capital structures that created the market in high-yield and mezzanine debt . Increased volume of distressed debt drew in hedge funds and credit derivatives deepened
855-565: The Bank Financial Strength Rating for the three banks from C− to D+. On 5 March 2009 Dexia's share price fell to an all-time low of €1.21, a loss of over 90% in a year. A further restructuring plan was announced, with the firm aiming to concentrate on its primary activities, and to avoid risks on the financial markets. A total of 1,500 job cuts were announced, of which more than half were in Belgium, 260 in France, and
900-472: The Dexia employees by 2014. At the same time, outgoing cashflows were diminished by reducing the bonds portfolio; even selling bonds at a loss, if necessary, which explained to a large extent the lesser profits in 2010. More incoming funds from private saving accounts and less outgoing capital through bonds and loans to public institutions meant that Dexia could already worry a bit less about finding sufficient short term funding. The greater international trust in
945-641: The European Banking Authority (EBA). The Comprehensive Assessment completed in October 2014 ahead of the entry into force of European Banking Supervision suggested Dexia had a capital shortfall of €340 million. However, as the bank was guarantee by States, the bank was not required to capital increases. A subsidiary, Dexia Asset Management changed its name to Candriam following its acquisition by New York Life Investments on 3 February 2014. In 2015 Dexia announced that it would suffer from
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#1732790938619990-485: The High Council. According to research of Netwerk Vlaanderen Dexia in 2005 together with AXA , Fortis , ING and KBC invested over €6.6 billion in companies that were involved in human rights violations. The companies and projects in which banks invest are controversial because of their support for dictatorial regimes, forced displacements and forced labour. The criticism concerns among others investments in
1035-501: The agreements between two financial institutions which fix the receiving agents of each counterparty in ordinary trades of some type. These agreements allow the related counterparties to make faster operations since the time used to settle the receiving agents is conserved. Limiting each subject to an SSI also lowers the likelihood of a fraud . SSIs are used by financial institutions to facilitate fast and accurate cross-border payments. Financial institutions in most countries operate in
1080-639: The company also showed when it announced an early retirement from the State Guarantee in 2010. Dexia and La Banque postale , the bank subsidiary of the French postal services , reached an agreement in January 2011 about a cash transaction involving covered bonds worth €3 billion. This was presented for La Banque Postale as an investment at market conditions, and as an extra source of liquidity for Dexia. Alleged differences of opinion were reported at
1125-524: The company's chairman Pierre Richard and CEO Axel Miller were dismissed, and were replaced on 7 October 2008 by former Belgian prime minister Jean-Luc Dehaene and Pierre Mariani respectively. On 24 October 2008, Francois Rebsamen , the socialist Mayor of Dijon and a French Senator, vacated his place on the board of Dexia Credit Local, while Antoine Rufenacht , UMP mayor of Le Havre , Philippe Duron , socialist mayor of Caen , and Christophe Bechu , president of Maine-et-Loire province stayed. At
1170-431: The debt haircut on Greek government bonds, its Common Equity Tier 1 (CET1) capital ratio became negative during the second half of 2011, and an orderly resolution process began in October 2011. As part of the resolution, Dexia Bank Belgium was bought out from the Dexia group by the Belgian state and has continued to operate, since March 2012 under the new name Belfius . The French bank focused on local government lending
1215-623: The end of 2008 Dexia sold the healthy parts of FSA, ceased its trading activities in Paris and trading on its own account in the financial markets. Further losses are still possible on the remaining FSA portfolio. On 19 January 2009 Moody's lowered the credit rating for Dexia's long term obligations and saving accounts of the three banking parts of Dexia (Dexia Credit Local in France, Dexia Bank Belgium and Dexia Banque Internationale in Luxembourg) from Aa3 to A1. The rating agency also downgraded
1260-709: The financial services provider Bloomberg Dexia lost €78 million through the Ponzi scheme of Bernard Madoff . On 6 February 2010 Dexia could announce that the European Commission had, under certain conditions, approved of the restructuring plan that was necessary to justify the government support for Dexia and to prevent unfair competition: Vintage retail activities represented a bigger share in profits again in 2010; apart from Belgium and France, Turkey became very promising in this area. So much so that predictions were that Turkish staff would account for half of
1305-718: The list of ' The Global 100 Most Sustainable Corporations in the World'. Dexia was the third company from the financial sector on the list. Through its Israeli subsidiary, Dexia operates in certain Israeli settlements in the Occupied Palestinian Territories. Several Belgian and French NGOs mounted campaigns to attract attention to this. Leading ultimately in 2011 to concrete plans to sell the Israeli division, Dexia Israel Bank [ he ] . After his forced departure in October 2008, CEO Axel Miller
1350-405: The market—trends outside the control of both the regulator and the leading commercial banks. A company that has been restructured effectively will theoretically be leaner, more efficient, better organized, and better focused on its core business with a revised strategic and financial plan. If the restructured company was a leverage acquisition, the parent company will likely resell it at a profit if
1395-464: The payout, but that its representatives on the board were outnumbered. Axel Miller's successor, Pierre Mariani , close to Nicolas Sarkozy , obtained a salary that is 30% higher than that of Miller. The board of directors unanimously accepted on 13 November 2008 to upgrade the yearly salary of the CEO to €1 million, and to fix the maximum bonus at €2.25 million. Miller's salary was €825,000, with
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1440-579: The possible default of Heta Asset Resolution , a bad bank from the residual of Hypo Alpe-Adria-Bank International . Via the subsidiary Dexia Kommunalbank Deutschland A.G. (DKD), Dexia had a loan of €417 million to former Hypo Bank. Carinthia state government offered to buy back the senior bonds for 75% par value and 30% for subordinated bonds of Heta. Previously Carinthia had guaranteed the subordinated bond but later Austrian central government, as instructed by European Union, could not provide any more state aid. Moreover, Financial Market Authority of Austria used
1485-631: The power given by EU Bank Recovery and Resolution Directive , which bail-in the shareholders and subordinated bond holders. On the subsidiaries, Crediop would be run-off, Dexia Credito Local Mexico had been placed in a trust, Dexia Kommunalkredit Bulgaria was liquidated, Dexia Nederland and Dexia Luxembourg (ex-Dexia LdG Banque) abandoned their banking licenses. Dexia sells its 58.9% interest in Dexia Israel Bank in March 2018. In December 2018, German subsidiary Dexia Kommunalbank Deutschland (DKD)
1530-498: The purpose of making it more profitable, or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure, demerger , or a response to a crisis or major change in the business such as bankruptcy , repositioning , or buyout . Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring. Executives involved in restructuring often hire financial and legal advisors to assist in
1575-794: The rest worldwide. Dexia's share price subsequently increased over the rest of 2009, largely varying between €4 and €7.50. On 31 March 2010 Bloomberg reported that Dexia was one of the largest borrowers from the discount window of the United States Federal Reserve , having outstanding loans of over $ 30 billion. In February 2009 the bank announced net losses of 3.3 billion euros (approximately 4.2 billion US dollars) for 2008. The Dexia 2008 annual report mentions among others losses of €1.6 billion from selling FSA, €600 million on portfolios and €800 million on counterparties (including Lehman Brothers , Icelandic banks , and Washington Mutual ) According to
1620-534: The same year Banque Internationale à Luxembourg (for €730 million) and DenizBank were sold. In January 2013 Dexia Municipal Agency was sold. It was reported in September 2013 that Dexia had entered into talks with New York Life Investment Management to sell Dexia Asset Management, which was completed on 3 February 2014. In 2013 SFIL was sold. ECB officials agreed on Thursday 22 May 2014 that Franco-Belgian bank Dexia would not have to demonstrate it could bear
1665-584: The top of Dexia. More specifically about tensions between Belgian directors and the French CEO, Pierre Mariani, concerning on the one hand the deficitary investments that had been mostly done in the French division of Dexia, and the liquid funds that were above all present in Belgium. On 15 July the European Banking Authority , as part of its European bank stress tests, gave Dexia a clean bill of health, reporting that its tier 1 capital
1710-525: The transaction's details and negotiations. It may also be done by a newly-hired CEO specifically to make the difficult and controversial decisions, required to save or reposition the company. It generally involves financing debt, selling portions of the company to investors, and reorganizing or reducing operations. The basic nature of restructuring is a zero-sum game . Strategic restructuring reduces financial losses, simultaneously reducing tensions between creditors and equity holders, in order to facilitate
1755-468: Was 12.1 percent, and would fall to 10.4 percent in 2012 under its "adverse scenario". This would make it one of Europe's safest banks. Dexia posted a €4 billion loss for the second quarter, the biggest in its history, after writing down the value of its Greek debt. On 4 October its shares fell 22% to €1.01 in Brussels, cutting its market value to €1.96 billion. Discussions were taking place about
1800-536: Was bought and removed from the stock market for about €1 billion. The two acquired companies Labouchère and Kempen & Co were merged into Dexia Netherlands. This merger had to be undone however, because of an asset leasing affair that threatened to damage the reputation of Kempen & Co. The asset leasing affair left Dexia in The Netherlands in the end with so much negative publicity that it decided to reduce its Dutch activities. In 2004 Kempen & Co
1845-483: Was contractually entitled to a 'golden parachute' of €3.7 million. This provoked protest from the French president Nicolas Sarkozy , and Miller subsequently renounced his bonus, leaving the matter to "the wisdom of the Board of Directors". The board eventually decided to pay him one year's salary (€825,000), thus ignoring Sarkozy's remarks. The French Ministry of Finance stated in April 2009 that it had voted against
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1890-556: Was founded as a dual-listed company , but in 1999 the Belgian entity took over the French entity to form one company. The company is headquartered in Brussels , Belgium. France and Belgium just injected another combined €5.5 billion ($ 7 billion) into Dexia. On 29 September 2008 Dexia came under pressure during the crisis in the banking sector . Other banks and financial institutions refused to provide further credit to Dexia because of potential losses at its U.S. subsidiary FSA and from
1935-437: Was restructured as SFIL . The remaining part of the Dexia group was left in a "bad bank", still called Dexia, to be gradually wound down. In the 2010 Fortune Global 500 (which lists companies by total income) Dexia was ranked 49th, the top-ranked Belgian company. The company was founded in 1996 through the merger of Crédit Communal de Belgique (founded in 1860) and Crédit Local de France (founded in 1987). The Dexia Group
1980-467: Was sold for about €85 million, a fraction of the buying price, to its management, the Friesland Bank , NPM Capital and HAL Investments [ nl ] . Dexia Bank Netherlands still continues to unwind asset leasing contracts under the commercial name of Legio Lease, and the corresponding agreements and court cases. Dexia suffered a substantial loss in March 2008, after a ruling from
2025-708: Was sold to Helaba for €352 million. Dexia was a member of the BEL20 and CAC Next 20 indices . Dexia is also one of the components of the Euro STOXX and Euro STOXX Banks indices. Dexia's BIC codes are: Dexia had ambitious plans in the Netherlands, and took over Bank Labouchère from the Dutch insurer Aegon in August 2000 at the height of the market. On top of this, in 2001 the business bank Kempen & Co
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