1. Marie-Alice Lallemand Flucher Senior Vice President Dexia Credit Local Dexia Credit Local… Steps from a public financial institution towards a private specialized bank Financing municipalities and sub-national governments The role of Specialized Local Funds and Financial Intermediaries Conference organized by IADF and GDA Washington September 30 th /October 1 st Dexia Credit Local… Steps from a public financial institution towards a private specialized bank

2. 2 In France, a fifty year period of infrastructure needs, fund flows decentralization process…  has lead to the transformation of the financial institution

3. 3 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

4. 4 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.

5. 5 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)

6. 6 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).

7. 7 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)

8. 8 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

9. 9 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.

10. 10 Dexia offices Etats-Unis FSA (100%) ASTRIS Grande-Bretagne Suède Allemagne Suisse Autriche, Pologne *, & République Tchèque * Kommunalkredit (49%) Italie Dexia Crediop (70%) France Belgique Luxembourg Australie * Irlande Portugal* Espagne Dexia Sabadell Banco Local (60%) Afrique du Sud Inca (4.5%) Slovaquie PKB (78%) Israël OSM (66%) Pays-Bas *Representation offices

11. 11 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.

12. 12 Contact… Communication Department Dexia Crédit Local 7-11 Quai André Citroën 75901 Paris cedex 15 Tel.: 33/ 1 43 92 76 50 Fax.: 33/ 1 43 92 75 53 http://www.dexia.com http://www.almwla.org