Dexia closes branches in Eastern Europe, including Romania

Dexia, the French-Belgian bank, announced that will put up for sale or close down its branches in seven East European states, including its branch in Romania, after its rating was revised downwards by Moody’s, according to European media reports. The bank opened the Romanian bureau in 2005 and has specialized since then in buying bonds issued by local administrations. After the European Commission, Moody’s also announced that the future of the economic model currently practiced by Dexia is uncertain. Moody’s has reduced the bank’s rating for financial solidity from ‘C minus’ to ‘E,’ arguing that its Eastern Europe divisions are the most vulnerable. The revision of Dexia’s financial solidity rating has led to more expensive loans on the inter-bank market. Latest data reveals that Dexia had approved EUR 800 million loans in Romania by the end of Q1 2008, out of which only EUR 460 million were effectively taken by local authorities. Dexia manages assets worth EUR 4 billion and is present in seven countries: Slovakia, Poland, Czech Republic, Romania, Hungary, Bulgaria and Croatia.

Dana Ciuraru