Business Lines 

 
The year 2008 was marked by an unprecedented financial crisis. In view of the deterioration of market conditions, Dexia was forced to take major steps to overcome the severely disrupted environment and to reestablish a solid base.
 
 
Transformation plan
 
On November 14, 2008, Dexia announced an important transformation plan aimed at managing risks even more firmly and re-establishing strict discipline in financial and activity terms.
The lines of this transformation plan will enable Dexia to refocus on its core client franchises, to improve its risk profile and to optimize its cost base. A progress report on the plan was communicated to the market on January 30, 2009.
 
Priority on core franchises
 
Dexia’s activities will be refocused on core client franchises in Public, Retail and Commercial Banking in core markets and
selected geographies.
The organization of the Group will be focused on two core client franchises: Public and Wholesale Banking for comprehensive banking activities focused on local public finance clients and Retail and Commercial Banking which now includes Retail, Commercial and Private Banking as well as Insurance, Asset Management and Investor Services activities.
 
 
Public and Wholesale Banking
 
Dexia meets the financing needs of local public authorities and other public services through direct loans, signed commitments, liquidity guarantees and the purchase of their securities. Dexia offers its customers a full range of products that include structured loans and debt management.
Dexia deploys its know-how to project finance across the globe while adhering to highly selective policies in line with the Group’s risk management standards. Dexia focuses on transportation, environmental and other essential infrastructure as well as the renewable energy sector.
 
The Public and Wholesale Banking model will be revisited in order to take account of the current market environment and
the Group’s funding capacities. The Group will now focus on markets combining:

• strong commercial franchises with direct client relationships and significant cross-selling opportunities;
• appropriate stable or long-term domestic funding base;
• attractive returns based on a low risk “local authority” type of environment.
The application of these three criteria has resulted in a significant
geographical reorientation:
• confirmation of the commercial franchise in France, Belgium and Luxembourg, as well as in Italy and in the Iberian Peninsula;
• in Japan, Germany and Switzerland, maintenance of establishments to retain platforms for access to funding sources, in
particular the German Pfandbriefe, but without any commercial development;
• significant reduction of activities in the United Kingdom and North America;
• discontinuation of activities in Australia, Eastern Europe (excluding Dexia banka Slovensko), Mexico, India and Scandinavia.
 
Beyond the geographical redeployment of its activities, Dexia aims to redeploy the commercial development of this business line, in order to enlarge the range of products and services to customers. This approach, which is already largely effective in Belgium, will enable the Group to go beyond its role of specialist lender in order to offer a better service to a broader customer base.
The ongoing financial crisis does neither question our clients’ solvency nor their financing needs. And Dexia remains – on
its core markets – a major player in public and infrastructure finance, the financing of the health and social housing sectors, and social economy.
 
 
Retail and Commercial Banking
 
Dexia is a leading European retail bank offering a wide range of banking and insurance services to more than six million customers – from individuals to small and medium-sized companies – in Belgium, Luxembourg, Slovakia and Turkey.
Dexia is one of the top retail banks in Belgium and Luxembourg and has a local bank in Slovakia.
Dexia’s DenizBank is the sixth-largest privately owned bank in Turkey.
Dexia Insurance Services supplies all the life and non-life insurance products sold in the retail networks of the Group in Belgium and Luxembourg, as well as in France.
Dexia is also a major private banking services provider through various entities, including joint ventures, principally in Belgium, Luxembourg, Switzerland and Denmark.
 
Dexia Retail and Commercial Banking activities have demonstrated good resilience during the crisis and have supported
the overall liquidity of the Group.
Dexia will continue to develop attractive retail, private and commercial banking franchises in Belgium, Turkey, Luxembourg and Slovakia, with stronger focus on attracting customer deposits.
Certain developments in retail and private banking not offering attractive return patterns in a context of global liquidity crisis will be discontinued.
 
Asset Management
 
Dexia Asset Management is a top-tier asset manager in Europe with a complete range of investment vehicles from traditional and alternative funds to socially responsible investments, an area in which Dexia is a leader in Western Europe. Dexia Asset Management specializes in the management of mutual funds and institutional and private mandates.
Dexia Asset Management operates through offices in Brussels, Luxembourg, Paris and Sydney, and via locally organized client relationship teams throughout Europe, the Middle East and Australia.
 
Investor Services
 
RBC Dexia Investor Services was created in 2006 as a joint venture with Royal Bank of Canada to offer its expertise in global custody, fund and pension administration and shareholder services to institutions around the world. The company ranks among the world’s top 10 global custodians and does business in fifteen countries on four continents.
 
Focus on Insurance activities
 
Dexia Insurance Services is the insurance pool of the Dexia Group operating in Belgium, France, Luxembourg, Turkey and Ireland. Life and nonlife insurance products are sold to Personal Financial Services customers (retail, SMEs and private) and to Public/Project Finance clients (public, social profit and corporate sectors) via a multi-channel approach including mainly bank insurance, exclusive consultants and direct writing.
 
 
Treasury and Financial Markets
 
Dexia’s principal businesses give the Group a strong presence in the capital markets, where it funds and manages the Group’s balance sheet and structures sophisticated products and solutions for clients of the various business lines.

2008 was characterized by an exceptionally severe financial crisis creating major disruptions on overall market liquidity,
securities markets and specific bank credit risks. The downturn in the economy, particularly in the US, and the accelerated dislocation of markets meant further difficulties for monolines and other financial institutions.
Against this background, Treasury and Financial Markets activities were significantly affected. In the beginning of the
fourth quarter of 2008, the business line initiated a substantial reduction of its risk appetite. Proprietary trading activities were discontinued. Value at Risk limits were halved on other trading activities.