EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 30 November 2012 
on a State guarantee covering certain commitments of subsidiaries of Dexia SA 
(CON/2012/100) 
 Introduction and legal basis 
On 28 November 2012, the European Central Bank (E CB) received a request from the Nationale Bank 
van België/Banque Nationale de Belgique (NBB), acting on behalf of the Belgian Ministry of Finance, for 
an opinion on a draft royal decree amending the Royal Decree of 18 October 2011 granting a State guarantee covering certain loans granted to Dexia SA and Dexia Crédit Local SA (hereinafter the ‘draft 
royal decree’). 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 provisions
1, since the draft royal decree relates to ru les applicable to financial institutions 
insofar as they materially influence the stability of fi nancial institutions and markets. In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1.  Purpose of the draft royal decree 
1.1  Article 36/24 of the Law of 22 February 1998 establishing the Organic Statute of the Nationale 
Bank van België/Banque Nationale de Belgique
2 empowers the King, on advice from the NBB, to 
adopt certain measures, notably the establishment of a system to grant a State guarantee covering liabilities entered into by certain supervised in stitutions, including their direct or indirect 
subsidiaries
3, or covering certain claims held by these institutions4 in the event of a sudden crisis in 
the financial markets or a serious threat of a sy stemic crisis. Based on th is empowering provision, 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  This provision was originally adopted as Article 117 bis of the Law of 2 August 2002 on the supervision of the financial 
sector and on financial services, w hose substance was transferred to the Law of 22 February 1998 on the  Nationale Bank 
van België/Banque Nationale de Belgique in the context of th e recent reform of the Belgian supervisory architecture. The 
ECB adopted Opinions CON/2010/7 and CON/2011/5 on the re form. All ECB opinions are available on the ECB’s 
website at www.ecb.europa.eu. 
3 See Article 36/24, par. 2 of the Law of 22 February 1998. 
4  See in particular Article 36/24, §1, 2° of the Law of 22 February 1998. 
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2 the King adopted on 18 October 2011 a royal decree setting up a guarantee scheme covering 
particular loans of certain entities of the Dexia group in the context of the group’s restructuring, on 
which the ECB adopted Opinion CON/2011/79. As the main features of the guarantee scheme set up at that time remain unchanged, Opinion CON/201 1/79 still applies and is therefore reiterated by 
the ECB for the purpose of  the current opinion. 
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 royal decree would now modify the guarantee scheme set up by the Royal Decree of 18 October 2011 in respect of (a) the scope of the guarantee, (b) the allocation of the shares in the guarantee between  the Belgian, French and Luxembourg States, and 
(c) the procedures for calling the guarantee.   
(a) The scope of the guarantee w ould first be extended to commit ments 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 whic h would be placed with US investors, given 
the limited interest of European investors fo r these instruments amid the European sovereign 
bond crisis.  Second, the draft royal decree clarifies that the commitments covered by the guarantee could take the form of loans, bonds and debt securities issued to institutional or 
qualified investors, including direct or indir ect subsidiaries of Dexia SA or Dexia Crédit 
Local SA. Third, since all guaranteed loans have  exclusively been issued by Dexia Crédit 
Local SA
5, the guarantee would be abolished for Dexia SA.  
(b) The allocation of the total amount of the guarantee, which would now amount to EUR 85 
billion instead of EUR 90 billion, among Belgium, France and Luxembourg would be adapted. Belgium would now guarantee 51,41%  of such amount, namely EUR 43,7 billion 
instead of the previous EUR 54,47 billion, which corresponded to 60,5% of EUR 90 billion. 
(c) The guarantee – which would still be payabl e on first demand under the Royal Decree of 18 
October 2011 – could also be payable ‘according to other procedures established by the 
Minister for Finance’
6. This change creates more flexib ility in enforcing the guarantee, 
which may be called preventively to avoid a defa ult 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 held w ithin a securities settlement system.   
1.3 The draft royal decree uses, to the greatest exte nt possible, the same terminology as the legal acts 
setting up in France and Luxembourg the other co mponent parts of the guarantee to the Dexia 
Group. The objective of this common terminol ogy is not only to reassure the investors
7, but also to 
                                                 
5 See the preparatory works of the draft royal decree, p. 6.  
6 Article 4 of the draft royal decree.  
7 See the preparatory works, p. 9.  
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3 enable Belgium, France and Luxembourg to stipulate their joint liability in the context of a specific 
transaction8.  
1.4 The provisions of the Royal Decree of 18 Octobe r 2011 on the duration of the guarantee that covers 
all commitments taken by 31 December 2021, the re quirement of remuneration to be paid by the 
Dexia Group and the powers of the Minister for Finance to take the implementation measures 
remain unchanged. 
1.5 The draft royal decree would enter into force on execution of the first guarantee agreement entered 
into between the Ministry for Finance and Dexia Crédit Local SA, or any subsidiaries of the Dexia 
Group, in implementation of the draft royal decree.  
2.  Specific observations 2.1 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 royal decree mainly 
purports to achieve greater consistency in th e concepts used under Belgian, French and 
Luxembourg law to describe the scope, nature and modalities of the guarantee extended to the 
Dexia Group. This would contribute to improving the legal certainty and a level playing field in the 
three Member States.  
2.2 The ECB understands that the extension of th e guarantee scheme to the bonds and debt securities 
issued by the subsidiaries of the Dexia Group is ex pressly allowed by Article 36/24, § 2 of the Law 
of 22 February 1998, according to  which direct and indirect subsidiaries of credit institutions are 
considered an inherent part of the credit ins titutions subject to supervision by the Belgian 
authorities. As a consequence, and provided that  these measures are necessary to limit the scale or 
effects of a sudden crisis in the financial market s or a serious threat of systemic risk, a State 
guarantee may therefore be issued under Belgian la w for the benefit of such subsidiaries, even 
though they are located in foreign countries. When  determining which subsid iary would effectively 
benefit from the guarantee and agreeing with th e Dexia Group its specific terms and conditions, 
including the remuneration, the Minister for Fina nce would nevertheless need to abide by Union 
competition and State aid rules. The Minister would also need to follow the principles identified in 
previous ECB opinions
9, namely that government guarantees should (i) address the funding 
problems of liquidity-constrained solvent banks, by  improving the functioning of the market for 
bank debt of longer-term maturity, (ii) preserve th e level playing field among financial institutions 
and avoid market distortions, and (iii) ensure consistency in the management of Eurosystem 
liquidity. 
2.3 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 or US  dollars by US subsidiaries of the Dexia Group 
and placed with foreign institutional investors. S hould the underlying instruments not be issued and 
                                                 
8 See the preparatory works, p. 13. 
9  CON 2011/79, paragraph 3, CON/2012/85, para graph 2.2 and CON/2012/4, paragraph 3.  
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4 held within the euro area, these instruments woul d therefore not be eligible for monetary policy 
purposes in view of Article 1(2) of Guidelin e ECB/2012/18 of 2 August 2012 on additional 
temporary measures relating to Eurosystem refi nancing operations and eligibility of collateral10. 
2.4 For instruments issued and held  within the euro area, the quantita tive restriction provided by Article 
5(3) of Guideline ECB/2012/18 would apply. This means that entities of the Dexia Group would be prevented from using such instruments in excess of  the nominal value of these instruments already 
submitted as collateral on 3
 July 2012. In both cases, the ECB welc omes that the issuance of these 
guaranteed bonds would not affect the conduct and implementation of monetary policy in the euro 
area.  
2.5 For the sake of transparency, the ECB would recommend that the draft royal decree be more 
specific as to the subsidiaries which will be cove red by and benefit from such guarantees. 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 rest ructuring of the group, some of the subsidiaries 
are sold while others are in the process of resolution or liquidation.  
2.6 The ECB understands that the guarantees provided to the Dexia Group could develop their effect 
until 31 December 2031. The draft royal decree coul d clarify whether the need for such guarantees 
may change in view of transposition in 2015 of the proposal for a directive of the European Parliament and of the Council establishing a framewo rk for the recovery and resolution of credit 
institutions and investment firms and ame nding 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
11. This Directive could provide additional tools also for the 
resolution of the Dexia Group. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 30 November 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                 
10  OJ L 218, 15.8.2012, p. 20. 
11  COM(2012) 280/3.