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)
Date: 2012-11-30
Institutions: European Central Bank
Subjects: Belgium, State aid, financial institution, financial stability, guarantee, loan, national law

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 (ECB) 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  provisions1,  since  the  draft  royal  decree  relates  to  rules  applicable  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 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 Belgique2 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  institutions,  including  their  direct  or  indirect 
subsidiaries3, 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 systemic crisis. Based on this empowering provision, 

1  
2  

3 
4  

OJ L 189, 3.7.1998, p. 42.  
This provision was originally adopted as Article 117bis of the Law of 2 August 2002 on the supervision of the financial 
sector and on financial services, whose substance was transferred to the Law of 22 February 1998 on the  Nationale Bank 
van België/Banque Nationale de Belgique in the context of the recent reform of the Belgian supervisory architecture. The 
ECB  adopted  Opinions  CON/2010/7  and  CON/2011/5  on  the  reform.  All  ECB  opinions  are  available  on  the  ECB’s 
website at www.ecb.europa.eu. 
See Article 36/24, par. 2 of the Law of 22 February 1998. 
See in particular Article 36/24, §1, 2° of the Law of 22 February 1998. 

 
 
 
 
                                                 
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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/2011/79 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  Governments  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 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 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  indirect  subsidiaries  of  Dexia  SA  or  Dexia  Crédit 

Local  SA.  Third,  since  all  guaranteed  loans  have  exclusively  been  issued  by  Dexia  Crédit 
Local SA5, 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 payable 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  flexibility  in  enforcing  the  guarantee, 

which may be called preventively 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 held within a securities settlement system.   

1.3  The draft royal decree uses, to the greatest extent possible, the same terminology as the legal acts 

setting  up  in  France  and  Luxembourg  the  other  component  parts  of  the  guarantee  to  the  Dexia 
Group. The objective of this common terminology is not only to reassure the investors7, but also to 

5 
6 
7 

See the preparatory works of the draft royal decree, p. 6.  
Article 4 of the draft royal decree.  
See the preparatory works, p. 9.  

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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 October 2011 on the duration of the guarantee that covers 

all commitments taken by 31 December 2021, the requirement 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  the  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 the guarantee scheme to the bonds and debt securities 

issued by the subsidiaries of the Dexia Group is expressly 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  institutions  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  markets  or  a  serious  threat  of  systemic  risk,  a  State 

guarantee  may  therefore  be  issued  under  Belgian  law  for  the  benefit  of  such  subsidiaries,  even 

though they are located in foreign countries. When determining which subsidiary would effectively 

benefit  from  the  guarantee  and  agreeing  with  the  Dexia  Group  its  specific  terms  and  conditions, 

including  the  remuneration,  the  Minister  for  Finance  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  opinions9,  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 the 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. Should the underlying instruments not be issued and 

8 
9  

See the preparatory works, p. 13. 
CON 2011/79, paragraph 3, CON/2012/85, paragraph 2.2 and CON/2012/4, paragraph 3.  

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held  within  the  euro  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 relating to Eurosystem refinancing operations and eligibility of collateral10. 

2.4  For instruments issued and held within the euro area, the quantitative 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 welcomes 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 covered 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 restructuring 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 could 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  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  1093/201011.  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  
11  

OJ L 218, 15.8.2012, p. 20. 
COM(2012) 280/3. 

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