Key European banks are facing new financial worries over their Greek debt holdings, with the Belgian-French bank Dexia struggling to avoid collapse.
Shares of Dexia stock plummeted Tuesday to an all-time low of less than one euro (less than $1.32), even as two of its owners, the Belgian and French governments, pledged their continued support for it. During an earlier crisis in 2008, the two governments helped bail out the cross-border bank, Belgium's largest lender, with an $8 billion cash infusion.
Belgian Finance Minister Didier Reynders and French officials said they were moving toward creation of a "bad bank" that would take over Dexia's worst assets - the loans not likely to be repaid in an effort to keep the Greek debt crisis from undermining it. The bank has already taken a $338 million loss on its Greek securities, but its losses could widen substantially in the months ahead depending on whether Greece eventually defaults on its international obligations.
Other European banks that bought Greece's bonds could also lose huge sums of money, beyond what they have already acknowledged.
Two large French banks, BNP Paribas and Societe Generale, have already recorded $1.2 billion in losses on Greek debt. Financial analysts say the two banks and others in Europe could lose substantially more if the Greek crisis is not resolved and the continent's debt contagion spreads to other governments.
Some information for this report was provided by AP, AFP and Reuters.