TOP MANAGERS have resigned from Dexia Banka Slovensko after the banking house announced losses of €82 million on bad foreign currency deals.
Due to unprecedented volatility on world global exchange markets some of Dexia Banka Slovensko’s clients who traded in large volumes on the exchange markets became partially unable to maintain the collateral sufficient to cover their financial operations, Dexia Banka said in a statement on October 28.
Head of the board of directors Pavol Ďuriník offered his resignation, which the bank’s supervisory board accepted. Marc Lauwers, who had served as president of the bank between 2004 and 2006, has replaced him.
Lauwers meanwhile said that the announcement in no way affects other clients of Dexia Banka Slovensko, which will continue focusing its activities on providing services to businesses and individual clients.
The bank also said that the majority shareholder Dexia Kommunalkredit Bank will provide first aid to restore Dexia Banka Slovensko’s capital base and the loss should therefore not have any significant impact on Dexia Banka Slovensko’s position.
Meanwhile, the central bank, the National Bank of Slovakia (NBS), said that it has been notified by the representatives of Dexia Kommunalkredit Bank and was cooperating with it to seek solutions to the situation.
Dexia’s representatives assured the central bank that they would make sure that the trading loss would not significantly affect the solvency of Dexia Banka Slovensko, NBS spokeswoman Jana Kováčová said in a statement.
The NBS is now reviewing trades conducted by Dexia Banka Slovensko on behalf of clients as well as the circumstances around the transactions, she added.
Meanwhile the central bank also said that it considers Dexia Banka to be stable and that its customers have no reason to worry about their deposits. The risks which led to the loss had been run by some professional clients, notably those trading in South African rand and US dollars, according to Dexia, whose parent bank recently received emergency state aid from the French, Belgian and Luxembourg governments.
The financial weekly Trend reported that speculation by one of the bank’s clients in South African currency caused the most serious losses for the bank. The losses for Dexia were approximately equal to total profit it has made since beginning operations in Slovakia. For the first half of 2008, the bank still reported net profit at €82 million, Trend wrote.
It’s the second set of adverse headlined for the Dexia banking brand in recent weeks. In late September the Belgian-French financial group Dexia needed government support to remain solvent, and questions were immediately raised about whether clients of Dexia’s Slovak subsidiary should be worried. Dexia Banka was quick in its response: it said its clients were safe and Dexia’s parent company was sound.
The Belgian, French and Luxembourg governments agreed to provide €6.4 billion to help the bank stay on its feet and on September 30 Dexia Banka confirmed that the Belgian-French group had increased its share capital.
Dexia has been operating in the Slovak market since 1993, with 54 branches serving over 200,000 clients.
