Marie-Alice Lallemand Flucher

Senior Vice President

Dexia Credit Local

Financing municipalities and sub-national governmentsThe role of Specialized Local Funds and Financial Intermediaries

Conference organized by IADF and GDAWashington September 30th/October 1st

Dexia Credit Local…Dexia Credit Local…Steps from a public financial institution towards a private Steps from a public financial institution towards a private

specialized bankspecialized bank

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In France, a fifty year period of

infrastructure needs,

fund flows

decentralization process…

has lead to the transformation of the

financial institution

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I / The reconstruction period after World War II

• Weak competencies and means of local governments• Urgent needs for improvements or creation of basic services

Local infrastructure are financed on subsidized bases- a large amount of state grants

- loans directly channeled by the Ministry of Finance

Low rate and long term additional loans from a public financial

institution, the Caisse des Dépôts et Consignations (CDC), funded

by the tax exempt savings of the French Households

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II / Mid 60’s to mid 70’s

• Pressure of the citizen’s demand for more equipments and

housing• Competition and scarce budgetary resources to face the

multiple demands

The CDC is asked by the government to favor tax exempt

savings for public housing.

CDC creates (in 1966) the Caisse d’Aide à l’Equipement

des Collectivités Locale (CAECL), an alternative public tool

to face local infrastructure needs by raising funds from the

financial market.

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III / Mid 70’s to mid 80’s

• Increasing maturity of local governments which have gained in institutional autonomy and tax power with the decentralization reform (1982)

• Banking reform facilitating direct access to local governments for the saving banks

• Investment funds demand reached a momentum that existing financial institutions can not face

The CAECL gives way to Crédit Local de France (CLF), a public owned bank with private status (1987)

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IV / End of XXth century

• The dynamic of the local sector market attracts commercial banks, from France and other countries. Crédit Local de France frees itself privatizing most of its capital.

• After a turmoil period, a few serious financial crisis of over indebted local governments remind the banking sector the specificity of the local sector and main commercial banks are withdrawing.

• The prospect and then the opening of the Euro market are nonetheless boosting international transactions within the local sector of Euro zone countries.

In order to face up to things, Crédit Local de France enters into an alliance with its Belgian counterpart, Crédit Communal, and becomes Dexia (1996).

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V / From now on… (1)

In order to answer to the increasing complexity of local

demands and to keep its leader position on a more and more

competitive market, Dexia endeavors to :

- maintain its high level of credit worthiness

Its high rating allows the bank to raise funds under the best

conditions (Dexia Crédit Local – Aa2, AA, AA+; Dexia

Municipal Agency – Aaa, AAA, AAA) and to be a major player in

credit enhancement in the USA (Financial Security Assurance

Aaa, AAA, AAA)

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V / From now on… (2)

…Dexia endeavors to…

- to provide a very large range of products and service

. Financing the needs of public sector by direct loans, credit

commitments and the acquisition of securities issued by clients

. Offering value added financial advisory, asset management,

debt management, insurance

. Structuring project finance

. Credit enhancing of municipal bonds

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V / From now on… (3)

In order to better serve local needs,

Dexia has expanded its activities in other countries;

it endeavors to work at the closest of its clients

dealing with local governments via its local offices.

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Dexia officesDexia offices

Etats-UnisFSA (100%)

ASTRIS

Grande-BretagneSuède

Allemagne

Suisse

Autriche, Pologne *, & République Tchèque *Kommunalkredit (49%)

Italie Dexia Crediop (70%)

France Belgique Luxembourg

Australie *

Irlande

Portugal*

EspagneDexia Sabadell Banco Local (60%)

Afrique du SudInca (4.5%)

SlovaquiePKB (78%)

IsraëlOSM (66%)

Pays-Bas

*Representation offices

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To conclude…

Dexia’s success story results from its progressive transformation

following the evolution of its potential clients

Passing from a totally public fund status to a fully private bank

meant that the local governments could then afford such a

development, also allowed by the legal framework.

The bank’s viability relies on its capacity to fit the local market

credit worthiness.

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Contact…

Communication DepartmentDexia Crédit Local7-11 Quai André Citroën75901 Paris cedex 15

Tel.: 33/ 1 43 92 76 50Fax.: 33/ 1 43 92 75 53

http://www.dexia.com

http://www.almwla.org