Some 60% of jobs, or 385, will be cut in Belgium, most of them in banking support operations. The rest of the job losses take place in Luxembourg (140), France (70) and elsewhere (70).

Dexia's management has promised that the number of forced redundancies will be kept to a minimum, but unions were last week preparing for possible action in protest at the cuts. Some members protested last week outside the bank's headquarters in Brussels.

"Surely the working man doesn't have to pay for a crisis that was caused by mismanagement by executives?" one protestor asked. Unions fear that the promise will not be kept: the average pay differential between the banking and insurance divisions of the company amounts to about 30%, making banking more vulnerable.

Dexia was first hit by the banking crisis in 2008, when rumours about liquidity caused a scare on the stock market, pushing the share price down from around €10 to €6.62 in a single day. That led to further panic selling, and the bank was forced to ask the government for a bailout in the form of a capital injection of €6.4 billion by the governments of Belgium, France and Luxembourg.

There was also a state guarantee of up to €150 billion on bonds and other securities. In return for that state guarantee, Dexia will this year pay out €500m in commissions, €300m of it to Belgium. Cost-cutting exercises are imposed on the bank by the EU Commission in order to justify state aid and to prevent unfair competition.