Societe Generale takes control of Credit du Nord

AP News
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Posted: Dec 11, 2009 5:45 AM

French bank Societe Generale said Friday it has taken full control of French retail bank Credit du Nord after buying out a stake held by Dexia SA.

Societe Generale said it had paid Dexia a total of euro676 million (US$995.75 million), including euro645 million for Credit du Nord's banking assets and euro31 million for its asset management unit Etoile Gestion.

Societe Generale agreed earlier this year to buy Dexia's 20 percent stake in Credit du Nord, which it financed through part of a euro4.8 billion capital increase.

Dexia sold the stake as part of its restructuring. The Franco-Belgian lender ran into trouble with its U.S. bond insurance unit FSA when it was hit by the subprime crisis, which saw loans made to people with poor credit drop sharply in value on worries that borrowers could not make repayments. Holders of bonds based on those mortgages suffered heavy losses.

As part of a government rescue of Dexia orchestrated year by France, Belgium and Luxembourg, Dexia is cutting costs and scaling back operations. The bank expects to save euro200 million this year alone through the proposed job cuts.