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UPDATE: Dexia board members reportedly met to discuss a new rescue plan. No word yet on what this plan will entail.
The bank will also cut more than $105 billion in municipal loans.
PREVIOUSLY: Belgian bank Dexia drew market fire today after being put on review by Moody’s for a possible downgrade.
Stocks of the Brussels-based firm fell 10.16% on the news, and on other fears about its exposure to Greek debt.
On the heels of these losses, Belgian financial newspaper De Tijd reported that the bank’s board will meet for an extraordinary meeting.
The company reported record losses — a whopping $5.3 billion in the second quarter alone — after writing down holdings of Greek debt, according to Bloomberg.
In addition to these massive write-downs, investors are worried that a credit crunch infecting the eurozone could magnify funding pressure on the bank.
Dexia faces “concerns about further deterioration in the liquidity position of the group in light of the worsening funding conditions in the wider market,” said Moody’s when it announced a review of Dexia’s credit rating.
UK-based trader Jawaid Afsar of Securequity Ltd. added (via Bloomberg), “The big worry for Dexia shareholders is a massive dilution of shares…There’s speculation that Dexia may be on the receiving end of a bailout. Dexia is the most exposed, and the news of a possible downgrade by Moody’s does not help.”
The bank was bailed out by France and Belgium in 2008. The fact that both these nations are under pressure from ratings agencies has not helped Dexia to calm investor fears.