(0,37 EUR, -11,72%) reported a pro-forma € 6.32bn net loss for 3Q11 including a € 4.1bn net gain on the sale of DenizEmeklilik and € +30m fair value adjustments on other asset disposals.
(36,89 EUR, -1,80%) pro-forma shareholders equity, including € 7,843m negative AFS reserve, stands at € 1.125m after took a € 2.4bn impairment on its Greek exposure and on goodwill. The deterioration of the AFS reserve (from € -6,068m pro-forma en June to € -7,843m end September) is mainly linked to spread widening and bonds reclassified into AFS.
Dexia’s liquidity update is covers the period February through October 3. What we retain is that they secured funding through bilateral and tri-party repos and that they also increased their take of Central Bank liquidity.
repeats the guarantees it received (FR 36.5%, BE 60.5%, LU 3%) on new funding, and that was validated on October 14; the sale Bank Belgium (finalised 20 October); the sale of DenizEmeklilik (3 October); deal with CDC & Banque Postal including sale of 70% of DEXMA (19 October 2011), negotiations for divestment of other entities (BIL, Denizbank).
says that planned divestments might generate additional losses that cannot currently be determined and would be accounted for at the time of signing.
DEXIA: EC would approve all of the planned disposals, as well as the new liquidity scheme. Sale Bank Belgium was already approved by EC as a "temporary emergency sale" in order to protect the commercial franchise of the bank and to avoid retail deposits outflows.
Our View:
Two important items will determine the investment case of the bond hedge fund is to become:
- How much additional losses will be recorded upon further divestment of group entities?
- How much of the € 7,843m negative AFS reserve will be recoverable upon maturity and how much of it will leave the scope upon further divestment of group entities?
The net equity at the end of September stood at c. € 0.60 per share.
Conclusion:
We maintain our Hold rating and € 1 target.