Dexia issues warning on profit and plans to cut jobs

Franco-Belgium bank Dexia warned late Wednesday that problems stemming from its Dutch subsidiary and the equity markets in general would cut full-year profits by 10%, or an estimated €140m ($138.1m).

The bank said that it would lay off between 100 and 170 employees in the Netherlands and split the Dexia Bank Nederland subsidiary into two units, an asset management division Kempen & Co and a retail division.

Dexia had been expected to report net profit this year of €143bn, unchanged from 2001. Financial markets had been driving up the bank's stock recently in the hopes of a successful cleanup of Dexia Bank Nederland, which has been at the centre of a share leasing scheme that turned sour.

Dexia rose 2.4% on Wednesday to €10.20 in Brussels before the profit warning, which came after markets closed. Analysts expected the stock to tank when markets open today.