Bail me out once, shame on you; bail me twice, shame on me;
shame on me; come back for a third (and final, we promise!) bailout,
only a Franco-Belgian SNAFU is capable of such Einstein-ian repetition. Dexia, that stress-test-passing bastion of all things entirely wrong with European banking and politics is back at the trough. Reuters
is reporting what we have known all along, that without massive
additional capital injections the bad-bank, crap-bank model simply
cannot work. To wit: Dexia needs to recap its Luxembourg unit
(BIL) before its apparently 'imminent' sale to a Qatari sovereign wealth
fund (one more billionaire sucker family born every day it seems).
The somewhat comical aspect is that the post-October (the second - and
final, we promise - bailout), BIL's 'legacy' bond portfolio was
'transferred' to its parent Dexia at December 2011 prices - creating a
net loss of EUR1.9bn for the subsidiary. This significantly affected the
sub's solvency - making it unlikely to meet its capital requirements (which it was 'sure' would be 9% Tier 1 by now!). But given Dexia's own extensive losses - EUR11.6bn in 2011 and EUR1.2bn in the first six months of 2012 - a capital increase for Dexia BIL may force Dexia to seek funds itself. That would mean mo' money, mo' bailout
from the states currently guaranteeing its borrowings - principally
Belgium and France, and to a lesser extent Luxembourg - which now look set to rise to EUR90bn in aggregate!
http://www.zerohedge.com/news/dexia-third-bailout-will-be-charm-they-promise
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