The European Commission approved on Friday the latest, 90-billion-euros restructuring plan for Dexia, a Franco-Belgian bank bailed out at the height of the financial crisis which has struggled ever since.
The Commission said the plan will wind up the core banking business while the remaining assets -- a development agency in France and the Belfius unit in Belgium -- will be put on a sound base.
"I am happy to finally be in a position to approve the resolution plan of Dexia," EU Competition Commissioner Joaquin Almunia said in a statement.
The plan, drawn up by major shareholders Belgium and France, along with Luxembourg, includes state guarantees worth 85 billion euros ($110 billion) and fresh capital of 5.5 billion euros.
With the main group closed down, Belfius, now owned by Belgium, will focus on its core banking and insurance business while Dexia Municipal Agency will be folded into a new development bank in France to provide local government funding.
"The approved plan ensures that the continued market presence of some parts of the Dexia group is truly justified ... and that competition distortions resulting from the aid received are minimised," Almunia said.
"Finally, the plan brings the cost for the taxpayer down to the level strictly necessary to carry out the orderly resolution process," he added.
Last week Almunia had said he would recommend the plan for approval so that the "biggest bad bank in the EU" which once had assets of some 300 billion euros, could finally be restructured in an orderly fashion.
In early November, France and Belgium agreed to inject 5.5 billion euros of fresh capital into Dexia to keep it afloat during its restructuring after the bank had to be bailed out first in 2008 and then again in 2011.
Dexia bank operated a retail business in Belgium but its core business was financing public bodies and local authorities in France and Belgium but the global financial crisis found it over-extended and unnable to raise funding.
France, Belgium and Luxembourg -- which held a small stake -- decided to break up Dexia in 2011 after it sought its second bailout.
Administrator Karel De Boeck said in November that totally dismantling the bank would take almost a century as a forced asset sale would trigger "enormous" losses.
"A total and immediate liquidation of Dexia is not possible. It would cost a mad amount of money," De Boeck said.
In its last results, for the third quarter, Dexia suffered a net loss of 1.2 billion euros, leaving it with negative shareholder funds, meaning it had no more capital.
That prompted the French and Belgian governments to put up 5.5 billion euros to keep it afloat long enough to be wound up safely, alongside state loan guarantees of 85 billion euros.
Belgium's share of the restructuring burden was reduced from 60.5 percent to 51.4 percent at the same time.