Dexia Credit Local S.A.

2022 and the first half of 2023 were marked by major developments. The group further advanced the simplification of the Dexia network in the U.S., as well as Italy, where subsidiary Dexia Crediop was absorbed by DCL on Sept. 30, 2023. What is to remain in Italy is a branch that will carry out exclusively auxiliary and non-regulated activities in support of its head office and facilitate communication with counterparties based in Italy. We don't expect any material impact on Dexia's financials because of the merger. DCL has also undertaken the repatriation of assets and associated derivatives from its Dublin branch to its Paris head office. As of June 30, 2023, a portfolio of €3.8 billion in assets has already

...Our ratings on Dexia Credit Local (DCL) rely on a consolidated analysis of the Dexia group (Dexia). Our analysis also incorporates our view of DCL's core status within Dexia, for which it is the main bank. DCL accounts for about 99% of Dexia's total assets as of June 30, 2023. On July 4, 2023, Dexia initiated a request to abandon its banking and investment services licenses and continue its run-off with the support of the French and Belgian governments. In our view, nonbank financial institutions face incremental risk relative to banks because they operate outside a regulated framework. This is why we placed our rating on DCL on CreditWatch with negative implication in July. We aim to resolve the CreditWatch upon agreement by relevant authorities (see "Dexia Group Entities Placed On CreditWatch Negative On Announced De-Banking," published July 7, 2023). We acknowledge that while Dexia would no longer need to meet prudential regulatory requirements or have access to a central bank, it would...

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