Last week, the European Commission (EC) announced that it has decided to further review Dexia’s restructuring plan under EC Treaty state aid rules to “establish whether the restructuring plan for the Dexia group will restore the group's long-term viability.” The plan includes a €6.4 billion capital injection, announced in September 2008, and “maintenance of a guarantee of up to €150 billion granted jointly by Belgium, France and Luxembourg, which was earlier approved as rescue aid” by the EC. In addition, the EC authorized “a guarantee for a portfolio of assets for a total value of $16.9 billion extended by the Belgian and French governments, a measure deemed indispensable for the sale of [Financial Security Assurance], Dexia’s US subsidiary, which is a prerequisite for the bank's return to viability.” The EC decided to further study the restructuring plans because the EC was unable to reach a favorable conclusion at this time. In reviewing the restructuring plan the EC must determine whether the plan will “restore the enterprise’s long-term viability within a reasonable timescale on the basis of realistic assumptions.”

Other aid measures approved by the November 18, 2008 decision, including a guarantee for bonds issued by Dexia and the liquidity support provided by the Member States, will remain in place until the EC completes its review.