- Dexia's exposure in this class of assets, either directly
or through FSA, is very well protected , and would not cause any losses,
even in case of further market deterioration.
- Current market conditions provide opportunities for new attractive business.
In order to address the questions of the investment community on this
subject, both from an industry viewpoint and as a direct player in this
field, Dexia holds today a conference with analysts to review the
situation in this market and give details about the exposure of its
various units that are active on this class of assets.
A presentation is available on Dexia's and FSA's websites, respectively www. dexia.com and www.fsa.com, under the caption:
" Sub Prime US Residential Mortgages - Analysis and overview of Dexia Group's exposure"
Pursuant to the analysis made by Robert Cochran, CEO of Dexia's
subsidiary FSA, Jacques Guerber, Vice Chairman of Dexia's Management
Board, declared :
¿Strict credit disciplines along with the search for adequate returns
on capital are the guiding criteria for underwriting risks and making
investments. FSA and Dexia have long expected problematic developments
to arise in the MBS sphere, and we have thus strongly reduced our
underwritings and investments in the sub-prime mortgages asset class
over the last two and a half years. The great majority of
investments/underwritings which were made were with AAA rated
Having looked closely at the current direct exposures and at the
protections available on each different tranche of assets, it is clear
that they are not susceptible of causing any losses, even in case of
further deterioration of debtors' default rates. As high as they may be,
current default statistics stand very far away from those levels which
would start hurting the tranches insured by FSA or held in its financial
product portfolio, nor those held in Dexia's credit spread portfolio.
Current conditions seem appropriate for the Group to write new
business at adequate/attractive levels of pricing so as to reward the
risks and yield proper returns on capital.
Both Dexia and FSA are satisfied to have kept their powder dry in anticipation of the recent market developments¿.
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