Dexia Bank Failure

About Dexia Bank Failure

Dexia, a Belgo French bank, failed in 2011 after passing European stress tests just months earlier. Dexia had specialized in lending to local governments. The bank took excessive risk with sovereign debt during the European debt crisis. Belgium and France bailed out Dexia, splitting it into a good bank and a bad bank. The failure was embarrassing for European regulators, as Dexia had passed stress tests in July 2011 with flying colors, only to collapse in October. The Dexia failure undermined confidence in European stress tests and led to tougher scenarios in subsequent tests. The bad bank, now called Belfius, continues to wind down Dexias legacy assets.