EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 1 February 2013 
on a State guarantee covering certain commitments of subsidiaries of Dexia SA 
(CON/2013/8) 
 Introduction and legal basis 
On 14 December 2012, the European Central Bank (ECB)  received a request from th e French Ministry of 
Economy and Finance for an opinion on a draft fina nce law for 2012 granting a State guarantee covering 
certain loans granted to Dexia SA and Dexia Crédit Lo cal SA (hereinafter the ‘draft law’). The ECB was 
requested to deliver an opinion under extremely urgent circumstances. 
The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, since the draft law relates to rules app licable to financial institutions insofar as 
they materially influence the stability of financial institutions and markets. In  accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft law 
1.1  The draft law amends Article 4 of the Fina nce (Amendment) Law for 2011 (Law No 2011-1416 of 
2 November 2011) on which the ECB has been c onsulted (CON/2011/85) and which authorised the 
Minister for the Economy and Finance to grant in re turn for payment a State guarantee, jointly with 
the Belgian and Luxembourg States, for financing ra ised or issued by Dexia SA and Dexia Crédit 
Local SA before 31 December 2021. The current maximum ceiling of liabilities guaranteed by the 
three States is EUR 90 billion of which 36.5% is borne by France; that is a share of EUR 32.85 
billion.  
As the main features of the guarantee scheme se t up at that time remain unchanged, Opinion 
CON/2011/85 still applies and is therefore reiterat ed by the ECB for the purpose of the current 
opinion. 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
ECB-PUBLIC  
2 1.2  In the context of the gradual break-up of the Dexia Group and further to the agreement reached by 
the Belgian, French and Luxembourg Govern ments on 8 November 2012 leading to the 
recapitalisation of Dexia SA, the draft law would now modify the guarantee scheme set up by the 
Finance (Amendment) Law for 2011 (Law No 2011-1416 of 2 November 2011) to specify the financing guarantee and to modify France’s share in the guarantee and the amount of its ceiling.   
Article 4 of the draft law clarifies the financing guarantee in four aspects:  (a) it introduces the concept of ‘qualified inv estor’ which includes direct and indirect 
subsidiaries of Dexia SA or of Dexia Crédit Local SA;  
(b) it clarifies that ‘guarantee’ includes the prin cipal, interest, costs and accessories of the 
guaranteed financing, bonds and securities;  
(c) it specifies the regime for foreign currency issues
2; 
(d) it increases the amount of the maximum ceiling on liabilities guaranteed by France which 
may not exceed 45.59 % of the total amount guaranteed by the three States.  
The scope of the guarantee would first be extended to commitments taken by the subsidiaries of the 
Dexia Group. The Dexia Group intends to issue, via its US subsidiaries, guaranteed bonds denominated in euro and US dollars which would be placed with US investors, given the limited 
interest of European investors for these instrument s amid the European sovereign bond crisis.    
The draft law clarifies that the commitments covere d by the guarantee can take the form of loans, 
bonds and debt securities. It also specifies that the amount of the principal of the liabilities guaranteed may not exceed the ceiling of EUR 38.76 b illion, taking into account the euro exchange 
value at the time the State guarantee is granted, of  the financing, bonds or securities in US dollars, 
Canadian dollars, pounds sterling, yen and Swiss francs. 
The allocation of the total amount of the guarant ee, which would now amount to EUR 85 billion 
instead of EUR 90 billion, among Belgium, France  and Luxembourg, would be adapted. France 
would now guarantee 45.59% of such amount, namely  EUR 38.76 billion instead of the previous 
EUR 32.85 billion, which corresponded to 36.5% of EUR 90 billion. 
The guarantee – which would still be payable unde r the Finance (Amendment) Law for 2011 (Law 
No 2011-1416 of 2 November 2011) – will apply unless provided otherwise by agreements entered 
into by the Minister for the Economy and Fina nce. This change creates more flexibility in 
enforcing the guarantee, which may be called preventiv ely to avoid a default at maturity or without 
mentioning the precise amounts due and payable on a specific date, such modalities being difficult to meet when the guaranteed securities are he ld within a securities settlement system.   
1.3 The provisions of the Finance (Amendment) Law for 2011 on the duration of the guarantee that 
covers all commitments taken on by 31 December 2021
3, the requirement of remuneration to be 
                                                 
2  In 2011 and 2012, the funding in foreign currencies represen ted up to 45% of Dexia issues. See Sénat preparatory work, 
report 203 by Mr François Marc. 
ECB-PUBLIC  
3 paid by the Dexia Group and the powers of the Minister for the Economy and Finance to take the 
implementation measures remain unchanged. 
 2.  Breach of the consultation obligation  The ECB received the request from the French Mini stry of the Economy and Finance for an urgent 
consultation on the draft law on 14 December 2012. The legislative process had started in Parliament on 
14 November 2012. The consultation request specified that the French authorities would like to receive 
the ECB’s opinion ‘as quickly as possible and in any case before 17 December 2012’. The French 
Parliament adopted the draft law at its 19 December 2012 session
4. 
According to Article 4 of Decision 98/415/EC, the ECB mu st be consulted ‘at an appropriate stage’ in the 
legislative process. This implies that  the consultation should take place at a point in the legislative process 
that affords the ECB sufficient time  to examine the draft legislative provisions and adopt its opinion. 
Pursuant to Article 3(4) of Decision 98/415/EC, Me mber States are obliged to  suspend the process for 
adoption of the draft legislative provision pending su bmission of the ECB’s opinion to allow the relevant 
national authorities to meaningfully deliberate the ECB’s opinion prior to adoption of the provisions. 
In this respect, the ECB stresses that even cases of particular urgency do  not relieve national authorities 
from their duty to consult the ECB and to allow su fficient time to take into account its views in 
accordance with Decision 98/415/EC. The French authorities should have consulted the ECB earlier or 
postponed the final vote on the draft law until such  time that would have allowed for a proper 
consultation with the ECB, as well as due considera tion of the ECB’s opinion. The ECB would appreciate 
the Ministry honouring its obligation to consult the ECB in due time in the future. 
 3.  Specific observations 3.1 The ECB welcomes the coordinated efforts by Belgium, France and Luxembourg in the context of 
the reorganisation of the Dexia Group. It notes with satisfaction that the draft law mainly purports 
to achieve greater consistency in the concepts used under Belgian, French and Luxembourg law to 
describe the scope, nature and modalities of the gua rantee extended to the Dexia Group. This would 
contribute to improving the legal certainty and a level playing field in the three Member States as regards the implementation of the guarantee.  
3.2 The ECB understands that the extension of the guarantee schem e to  bonds and debt securities 
would benefit issues of such instruments by the subsidiaries of Dexia SA and Dexia Crédit Local SA. As a consequence, and provided that these measures are necessary to limit the scale or effects 
of a sudden crisis in the financial markets or a serious threat of  systemic risk, a State guarantee may 
                                                                                                                                                             
3   Article 4 of Finance Amendment Law for 2011 (Law No 2011-1416 of 2 November 2011). 
4  The law was published on 29 December 2012 in the Journal Officiel . Finance (Amendment) Law for 2012 (Law 
No 2012-1510 of 29 December 2012).  
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4 therefore be issued under French law for the benef it of such subsidiaries, even though they are 
located in foreign countries. When determining wh ich subsidiary would eff ectively benefit from the 
guarantee and agreeing with the Dexia Group its specific terms and conditions, including the 
remuneration, the Minister for the Economy and Finance would nevertheless need to abide by 
Union competition and State aid rules. The Minist er would also need to follow the principles 
identified in previous ECB opinions5, namely that government guarantees should (i) address the 
funding problems of liquidity-constrained solven t banks, by improving the functioning of the 
market for bank debt of longer-term maturity, (ii)  preserve the level playing field among financial 
institutions and avoid market distortions, and ( iii) ensure consistency in the management of 
Eurosystem liquidity. 
3.3 The ECB notes, however, that one of the objectives of the extension of the guarantee is to enable 
the issuance of bonds denominated in euro, US do llars, Canadian dollars, pounds sterling, Japanese 
yen or Swiss francs for placement with foreign institutional investors. Should the underlying 
instruments not be issued and held within the eu ro area, these instruments would therefore not be 
eligible for monetary policy purposes in view of Article 1(2) of Guideline ECB/2012/18 of 2 August 2012 on additional temporary measures relati ng to Eurosystem refinancing operations and 
eligibility of collateral
6. 
3.4 For instruments issued and held  within the euro area, the quantita tive restriction provided by Article 
5 of Guideline ECB/2012/18 would apply. In both cases, the ECB welcomes that the issuance of 
these guaranteed bonds would not affect the conduct and implementation of monetary policy in the 
euro area.  
3.5 For the sake of transparency, the ECB recommends specifying in the draft law the subsidiaries 
which will be covered by and benefit from such gua rantees. A general reference to any direct or 
indirect subsidiaries of Dexia SA or Dexia Crédit Local SA might be misleading at a time when, in the course of the restructuring of the group, some of  the subsidiaries are sold while others are in the 
process of resolution or liquidation.  
3.6 The ECB understands that the guarantees provided to the Dexia Group could develop their effect 
until 31 December 2031. The draft law could clar ify whether the need for such guarantees may 
change in view of transposition in 2015 of the pr oposal for a directive of the European Parliament 
and of the Council establishing a framework for the recovery and resolution of credit institutions 
and investment firms and amending Council Directives 77/91/EEC and 82/891/EC, Directives 
2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/ 36/EC and 2001/35/EC and Regulation 
(EU) No 1093/2010
7. This Directive could provide additional tools also for the resolution of the 
Dexia Group. 
 
                                                 
5  CON/2011/79, paragraph 3, CON/2012/85, para graph 2.2 and CON/2012/4, paragraph 3.  
6  OJ L 218, 15.8.2012, p. 20. 
7  COM(2012) 280/3. 
ECB-PUBLIC  
5 This opinion will be published on the ECB’s website. 
  Done at Frankfurt am Main, 1 February 2013. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI