x Abu Dhabi, UAEThursday 27 July 2017

Qatar royal family buys stake in Dexia bank's Luxembourg unit

Euro Zone: The troubled European bank Dexia is getting help from Qatar's royal family and other investors, who are taking over the bank's Luxembourg unit.

Dexia will become the first euro-zone bank to receive support after it yesterday agreed to the nationalisation of its Belgian banking unit in return for €90 billion in state guarantees. Reuters
Dexia will become the first euro-zone bank to receive support after it yesterday agreed to the nationalisation of its Belgian banking unit in return for €90 billion in state guarantees. Reuters

Qatar's royal family is among investors taking over the troubled European bank Dexia's unit in Luxembourg, the latest investment by the state in the debt-hit euro zone.

A group made up of "members of the royal family of Qatar" was "willing to buy" Dexia Banque Internationale à Luxembourg "at short notice", Luc Frieden, the Luxembourg finance minister, said yesterday.

The government planned to take a minority stake that would cost no more than €150 million (Dh750.6m), he said. The troubled Franco-Belgian bank, will become the first euro-zone bank to receive support after it yesterday agreed to the nationalisation of its Belgian banking unit in return for €90 billion in state guarantees.

The breaking up of Dexia became almost certain after anxiety about the bank's European sovereign debt holdings led to the drying up of its short-term funding.

It emerged yesterday that Qatar was also investing in KBC, Belgium's biggest bank and insurer by market value.

The bank agreed to sell its private banking unit for €1.05bn to Precision Capital, based in Luxembourg, which represents the business interests of an unspecified Qatari investor, KBC said.

In another significant European investment, Qatar Holding this month signed a deal to take a 9.9 per cent stake in European Goldfields, a gold miner based in London, including providing US$600m (Dh2.2bn) to finance gold production in Greece.

The public debt crisis engulfing most of the western world was a main topic dominating talks at the opening day of the World Economic Forum (WEF) meeting in Abu Dhabi yesterday.

As many as 800 of the globe's brightest thinkers and business leaders gathered in the capital yesterday for the start of the two-day WEFGlobal Agenda summit to discuss the state of the world economy. They are gathering at a period of renewed uncertainty in the global economy against a backdrop of an unfolding sovereign debt crisis in Europe, deadlock over resolving the US budget deficit and a large build-up of public debt in Japan.

The public debt crisis emerged as the top trend likely to affect the global economy in the next 12 to 18 months, according to a survey of almost 500 experts who make up WEF's 79 global agenda councils.

Reinforcing the anxiety about the European sovereign debt turmoil, the former British prime minister Gordon Brown said the euro needed reforming and the continent's banks should be recapitalised to help to surmount the crisis. Problems in the euro zone had escalated from a fiscal to a banking crisis, he said during a speech at the summit yesterday.

"The euro zone is the epicentre of today's banking crisis. The euro in its present form will not survive and will have to be reformed," he said. "Europe's banking system will have to be recapitalised and Europe will have to find a strategy to fund the different needs of the different countries which are finding it difficult to raise funds on international markets."

The European Central Bank, the European Financial Stability Facility and the IMF needed to work together to ease difficulties, he said.

tarnold@thenational.ae