Annual report 2010 - Dexia.com

Update on the transformation planThe year 2010 was dominated by the Dexia transformationplan. It began with the European Commission acknowledgingthe progress made since the launch of the plan in November2008. On 5 February 2010, the Belgian, French andLuxembourg governments and the European Commissionconcluded an agreement in principle on the Dexia Grouprestructuring plan which was definitively confirmed by thenew commission on 26 February 2010.The commitments made to the European Commission, as wellas the progress made in 2010 are detailed below.The Dexia restructuring plan is being monitored by anindependent expert commissioned by Dexia and the EuropeanCommission. The extent to which the objectives are being metwill be concluded from the report to be issued by the expertby 30 April 2011. With regard to the commitments related tothe balance sheet, accounting data as at 31 December 2010will be restated, in compliance with the measures outlined inthe Commission’s decision.Throughout the year, the Group continued successfully toimplement its transformation plan, reducing its short-termfunding requirement and thus its risk profile, despite aturbulent economic environment.DisposalsThe Group continued to refocus on its main franchisesand its historical markets, and this was reflected by severaldisposals.On 11 March 2010, Dexia finalised a secondary public offeringof 21,848,934 common shares in Assured Guaranty, in itspossession since the sale of the insurance activities of FSA toAssured Guaranty. The shares sold represent all the commonAssured Guaranty shares held by Dexia. The transactiongenerated a gross capital gain of EUR 153 million.In the first half of 2010, the Group also finalised the sale ofits subsidiary Dexia Épargne Pension.In June 2010, Dexia concluded an agreement with EDF inrelation to the sale of its 6.13% holding in SPE, a companyoperating in the energy sector in Belgium, as well as anagreement with Network Research Belgium, a Belgian ITservice provider, in relation to the sale of its 51% holding inAdInfo, a company active in the field of IT services to Belgianlocal authorities. The gains from these disposals amountedrespectively to EUR 69 million after taxes for SPE and EUR 14 millionafter taxes for AdInfo. These two transactions are in linewith the agreement with the European Commission providingfor disposal of these holdings before 31 December 2010.In November 2010, Dexia concluded an agreement withPenta Investments Ltd, a Central European investment group,on the sale of its 88.71% stake in Dexia banka Slovensko.The transaction is part of the agreement with the EuropeanCommission that provides for the disposal of Dexia bankaSlovensko by Dexia before 31 October 2012. The transactionshould be finalised during the first half of 2011.Dexia also launched the process for disposal or floatingof DenizEmeklilik, the insurance subsidiary of DenizBankin Turkey, in line with the agreement with the EuropeanCommission to make the sale before 31 October 2012. Nonbindingoffers have already been received.Finally, Dexia also undertook to sell its 70% holding in DexiaCrediop (Italy) before 31 October 2012 and its 60% holdingin Dexia Sabadell (Spain) before 31 December 2013.Creation of the Legacy DivisionSince the beginning of 2010, Dexia has regrouped itsportfolios in run-off as well as some Public and WholesaleBanking non-core loans and off-balance-sheet commitmentsin a specific division, named Legacy Portfolio ManagementDivision (Legacy Division) alongside the core business lines,now brought together in the Core Division.The Legacy Division contains:• the bond portfolio in run-off;• the Financial Products portfolio;• non-core public sector loans.The assets of the Legacy Division remain on the Group balancesheet and benefit from clearly identified and allocated funding,as illustrated in the table hereafter (page 14). Governmentguaranteedfunding is entirely allocated to this division.The division also includes off-balance-sheet commitments ofthe Public and Wholesale Banking business line in the UnitedStates, corresponding principally to undrawn liquidity lines inrun-off.This new analytical segmentation, in line with undertakingsmade to the European Commission, enables Dexia to improveconsiderably the visibility of its core business lines.Management reportConsolidatedfinancial statementsAdditional information Annual financial statementsAnnual report 2010 Dexia13