Abstract

After being one of the largest financing groups, Dexia is nowadays the shadow of its powerful past. Indeed, shortly after the financial crisis (08), the once multinational behemoth had to cope with a liquidity crisis and a balance sheet in the red. Soon, a dismantling was determined to be the best solution for facing DEXIA’s 3 consecutive crisis: Financial; Governance; Sovereign debt. Given the bank’s unique business model and corporate governance, the dismantling process was long and sinuous, all the more since the macroeconomic turmoil is ongoing in Europe. After having experienced huge losses in 2011 (4 billion EUR), and having lost public opinion support, the bank has a do-or-die decision to make in order to recover. Luigi Macalli (the names have been changed) has been the head of BIL for years. In 2001, BIL became part of Dexia group. As the group pursued its growth, DEXIA BIL increased in terms of size, AUM, activity scope, international influence, etc. However, the collapse of the group leave DEXIA BIL leaders trying to find a way to escape from this dead end street. As a board member of DEXIA, Luigi Macalli has to manage a turnaround strategy where critical factors such as governance, hedging over financial market fluctuations and ongoing significant losses, have to be addressed. Due to the bank nationalisation, the board had been completely renewed, as well as the bank mission and responsibilities. What would be the best decisions to make, considering these shifts, to overhaul DEXIA business?

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