Belgium's federal government and its regions clashed on Friday over the fate of the Belgian banking activities of stricken Dexia SA
Dexia, whose shares have slid 42 percent this week, is on the verge of being split up after twin blows from its heavy exposure to Greece and increasing troubles accessing wholesale funding.
Dexia's board meeting to discuss the future of the group was pushed back to Sunday from Saturday after Belgium struggled to find a common stance to bring to negotiations with France.
The Belgian government favors nationalization of Dexia's Belgian unit Dexia Bank Belgium. However, the regions of Flanders, Brussels and Wallonia, often divided by their linguistic differences, were united in opposition.
They fear the loss of most or all of the 1 billion euros ($1.4 billion) they contributed to an initial Dexia bailout in 2008 and a loss of influence in a business that lends to local authorities across Belgium.
The regions are speaking with one voice. We now have to find one voice for Belgium, Rudy Demotte, premier of the French-speaking Wallonia region, told reporters after a meeting of regional chiefs with Belgium's prime minister and finance minister.
Demotte's Flemish counterpart Kris Peeters said: I can say that my colleagues, both at federal and regional level, are doing everything to find a good solution, but that there's still some work.
Finance Minister Didier Reynders said a final decision on the fate of Dexia Belgium would be taken after consultations with the regions, local authorities and shareholders.
France and Belgium both hold 5.7 percent stakes in Dexia, the same as Belgium's regions combined. French state bank Caisse des Depots et Consignations is Dexia's largest shareholder with a 17.6 percent holding.
A grouping of all 589 Belgian municipalities holds 14.1 percent and Arco Group, a holding for labor unions and certain local bodies, has 13.8 percent.
Union representatives said caretaker Prime Minister Yves Leterme had told them the government wanted to take over the bank's Belgian banking operations after the split-up of the group.
Unions favored a Belgian solution as well as avoiding any job losses.
Belgian and French financial experts began talks on Dexia's future on Thursday, but politicians from each country have yet to enter discussions.
Belgium told France on Thursday it was not willing to foot the whole bill for rescuing the bank.
Reynders said the government would not comment on what options were under discussion and would only announce a final decision when it was made.
French Prime Minister Francois Fillon said on Friday Caisse des Depots will lend 3 billion euros to local authorities by the end of 2011 to replace loans from Dexia.
Under a French contingency plan, a new entity combining Caisse des Depots and the French postal bank would take up Dexia's portfolio of loans to French local authorities.
This plan resembles the one the government enacted in 2008 which had allowed us to maintain funding for local authorities at a time when banks were showing signs of weakness, Fillon said in a speech at Richelieu in eastern France.
Dexia shares remained suspended after dropping 17.2 percent on Thursday. Trading will not resume until Monday because the Belgian market regulator had said Dexia needed to provide more details about the sale of its Luxembourg arm.
Dexia said it had started talks with an international investor on the sale of the Luxembourg unit. Some media reports said the buyer was Qatar and it was set to pay 900 million euros.
($1 = 0.741 Euros)
(Additional reporting by Jean-Baptiste Vey; Editing by David Cowell and David Holmes)