The Belgium government offered to buy Dexia's Belgian banking business for 4 billion euros ($5.4 billion) and would provide the bulk of guarantees for the parent group's leftover assets, the Belgian prime minister said on Monday.

According to the plan, the Belgium state would take over Dexia Bank Belgium, Dexia's largely retail Belgian banking division, which has 6,000 staff and deposits totaling 80 billion euros for 4 million customers.

Dexia would be left with 90 billion euros of assets, some of them toxic, covered by state guarantees -- 60.5 percent from Belgium, 36.5 percent from France and 3 percent from Luxembourg.

We found an agreement on the fair division of the costs related to the management of the 'rest bank', Belgian Prime Minister Yves Leterme told a news conference in the early hours of Monday.

The Franco-Belgian bank has not yet said it will approve the plan, which was unveiled by leaders of Belgium at a news conference. The board of directors began their deliberations late afternoon on Sunday.

The plan was approved by the governments of France, Belgium and Luxembourg.

The extraordinary meetings at the end of the weekend had echoes of the dismantlement of financial group Fortis in October 2008 by the Netherlands, Belgium and BNP Paribas. Then, shareholders protested at the initial terms offered, and only agreed on improved terms six months later.

The governments rushed to support Dexia after it became the first bank to fall victim to the two-year-old euro zone debt crisis, as a credit crunch denied it access to wholesale funds and sent its shares down 42 percent last week.

Belgium said Dexia's French public finance business Dexia Municipal Agency would be backed in future by French state bank Caisse des Depots. A consortium of CDC and Banque Postale, the French post office's banking arm, would ensure the financing of public entities in France.

Dexia is also expected to announce the planned sale of healthy businesses, such as Denizbank in Turkey.

For Belgium in particular, the bill to rescue Dexia could be high. The country had a debt-to-GDP ratio of 96.2 percent last year, lower only than Greece and Italy among euro zone members and on a par with bailout recipient Ireland.

The likely burden of bailing out Dexia led ratings agency Moody's to warn Belgium late on Friday that its Aa1 government bond ratings may fall.

Finance Minister Didier Reynders said that the deal should not push Belgium's debt-to-GDP ratio above 100 percent.

Dexia, which used short-term funding to finance long-term lending, found credit drying up as the euro zone debt crisis worsened. The problem was exacerbated by the bank's heavy exposure to Greece.

Dexia has global credit risk exposure of $700 billion - more than twice Greece's GDP - and its rescue has stoked investors' anxieties about the strength of European banks in general.

The governments' rescue package came as the leaders of France and Germany agreed that European banks needed to be recapitalised, but papered over differences on how that would happen.

Paris wants to tap the euro zone's 440 billion euro ($594 billion) European Financial Stability Facility (EFSF) to recapitalise French banks, while Berlin is insisting the fund should be used as a last resort.

There were fresh reports over the weekend that big French banks BNP Paribas and Societe Generale might agree to capital injections as part of a Europe-wide plan to boost lenders' financial strength. However, both banks deny such plans.

Dexia's shares have been suspended since Thursday afternoon. It was not clear whether they would resume trading on Monday morning, when Dexia Chairman Jean-Luc Dehaene and Chief Executive Pierre Mariani was scheduled to host a news conference.

(Reporting By Philip Blenkinsop. Editing by Sebastian Moffett and Ramya Venugopal)