The Belgium government has offered to buy Dexia's Belgian banking business for 4 billion euros ($5.4 billion) according to a statement by the Belgian Prime Minister.

Earlier the governments of France and Belgium agreed to nationalize Dexia, the largest bank of Belgium.

Belgian Prime Minister Yves Leterme and French Prime Minister Francois Fillon released a joint statement Sunday saying that a solution had been reached as “the result of intense consultations with all partners involved."

Dexia, which is a Franco-Belgian bank, had a debt exposure totaling more than $700 billion at the end of June .

Nationalization is a sign of the problems facing European banks and governments, and it may threaten Belgium’s credit rating.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said after a meeting in Berlin on Sunday that they are ready to recapitalize banks that have been shaken by the debt crisis. “We are determined to do what’s necessary to secure the recapitalization of our banks,” Merkel said at a joint news conference with Sarkozy.

Belgium’s public debt, compared with the size of its economy, is the third-highest in the euro zone after that of Greece and Italy.