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BRUSSELS - BELGIUM, France and Luxembourg have agreed to inject 6.4 billion euros (S$13.12 billion dollars) into the troubled Franco-Belgian bank Dexia, Belgian Prime Minister Yves Leterme said on Tuesday.
The injection of capital, reached after a long night of negotiations, is intended to reassure the stock markets after Dexia shares plummeted by nearly 30 per cent on Monday.
Under its terms, Belgium will invest three billion euros in Dexia. The French government and the French state financial institution Caisse des Depots will add another three billion while Luxembourg will invest 376 million euros through a convertible loan.
Dexia was founded in 1996 as a merger of France's Credit Local and Belgium's Credit Communal. While it specialises in local government finance, it also has 5.5 million individual clients in Belgium, Luxembourg, Slovakia and Turkey.
On Sunday the governments of Belgium, The Netherlands and Luxembourg had part-nationalised the leading Belgian bank, Fortis, as the shockwaves from the US financial crisis shook Europe.
After sliding nearly 33 per cent in early trading in the Belgian capital on Monday, Dexia's shares plunged 29.65 per cent to 7.07 euros on the Paris bourse.
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