Given the previous activity of Dexia Crédit Local, as a lender to local authorities, a large part of the Group’s portfolio is related to the local public sector and is of good quality. These high quality assets constitute a substantial source of secured funding for Dexia Crédit Local, which can be raised through various channels: repos, covered bonds and central bank funding.
Secured funding raised through the repo markets
Historically Dexia Crédit Local was active in the long-term repo market. Following the sale of Dexia Bank Belgium (now Belfius Bank), which acted as competence centre to collect secured funding for Dexia Group, Dexia Crédit Local had to create its own short-term repo platform and to establish the appropriate set-up to develop this short-term secured funding capacity.
Over past years, significant progress has been made in terms of repo market access, counterparties and volumes. Currently, Dexia Crédit Local is active through:
· Several market platforms (Eurex Paris, Eurex Berlin, Mic Rome, MCS and X-COM);
· Bilateral or tripartite transactions with banking counterparties or asset managers.
Going forward, the aim is to continue diversifying and increasing the number of counterparties.
Please click here for more information on Dexia’s asset portfolio.
Secured funding raised through covered bonds
Since the sale of Dexia Municipal Agency (now CAFFIL) in 2013 to the French State, Caisse des Dépôts and La Banque Postale, Dexia Crédit Local has been marginally active in covered bond issuances through its wholly-owned German subsidiary, Dexia Kommunalbank Deutschland (DKD). DKD is historically focused on German public sector finance and refinances its assets through Pfandbriefe, with a yearly presence in the markets.
For more information on Dexia Kommunalbank Deutschland Pfandbriefe programme, we refer to the entity’s website.
Secured funding raised through the Eurosystem
In 2011, Dexia Group’s balance sheet was mainly funded on a short-term basis for long-term assets, resulting in refinancing difficulties following the closure of the financial markets during the sovereign debt crisis, leading ultimately to the orderly resolution of the Group.
Consequently, at the inception of its orderly resolution, the Group was very dependent on Eurosystem funding. Gradually, Eurosystem funding was reduced and replaced by government guaranteed and secured funding.
Currently, Dexia Crédit Local uses only MRO and LTRO Eurosystem financing. The Group does not use any Emergency Liquidity Assistance.