PARIS |
Oct 4 (Reuters) - A break-up of Dexia may not be what the Franco-Belgian bank's chief executive, Pierre Mariani, dreamed of when he took the reins three years ago, but it is one solution being pursued by his former boss: French President Nicolas Sarkozy.
France is in talks to restructure Dexia by breaking off the arm of the bank that lends to local governments and putting it back under the control of state bank Caisse des Depots -- where it was before the 1990s -- and state-owned Banque Postale, the banking unit of the French postal service.
At the heart of the plan is the Sarkozy administration's desire to safeguard the future financing of various French towns, municipalities and regions, many of which rely on Dexia and which would be in the firing line if the bank fell victim to a liquidity crunch.
The plan has been months in the making but Dexia's plummeting share price and a rapid deterioration in investor sentiment in the banking sector have dramatically ratcheted up the stakes.
"All of France's regional authorities borrow or have borrowed from Dexia or its predecessors...Dexia's situation and the conditions in which its employees work are crucial for these authorities," Philippe Marini, a senator from Sarkozy's centre-right UMP party, told Reuters on Tuesday.
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