In contrast, the Brussels Region decided to treat the Dexia losses by its 19 municipalities as a case of force majeure. Councils that fail to meet their budgetary targets as a result of the losses would not be penalised in their grants from the region, minister-president Charles Picqué said. At the same time, councils will be able to take out a total of €26 million in new loans at “very favourable rates”. Writing off the councils’ losses will cost the capital region about €8 million.

Peeters made it clear that the situation in Flanders is quite different – the sums involved, for one thing, are much larger. In addition, the provinces and municipalities sat for years in GH as shareholders, accepting the dividends that came along. The Flemish Region did not reap the benefits then, and will not be picking up the check now.

Philippe Muyters, Flanders’ budget minister, said the plan to dismantle GH would cost the region €285 million. The region’s problem now, he told VRT radio, was to figure out where the money will come from. Flanders has €230 million in its budget for 2012 for new policy spending and a €50 million buffer. The decision, Muyters said, comes down to either cuts in spending or new debt. “We’d rather not have extra debt,” he said.

Last week GH was faced with bankruptcy as loans became due that could not be covered. The holding won a few days’ grace, and the decision has now been taken that it will undergo what Flemish minister-president Kris Peeters referred to as “controlled liquidation”. Under the terms of the agreement reached at the weekend, the federal government, together with the three regions, will cover the €800 to €900 million in GH debts that are not covered by assets.

The three regions pick up half of that sum, with Flanders paying the largest part at €225 million, and Brussels responsible for €67.5 million. In addition, the regions will write off a total of €120 million in commercial paper they hold on their own behalf. The liquidity of the Holding will be guaranteed by Dexia until 7 December. One effect of opting for a liquidation rather than bankruptcy is that the directors of the holding are not then vulnerable to a legal inquiry into their responsibility for the crisis.

Muyters stressed that this was not, however, the reason for the decision and said that there will be an opportunity to questions the people involved during hearings in the Flemish parliament into the whole affair. That procedure follows the failure of a proposal to set up an investigative committee in the federal parliament into the Dexia- GH affair, which was voted down by the government parties.

Former prime minister Jean-Luc Dehaene, the outgoing chairman of Dexia, will appear at the Flemish parliament hearings to explain his role in the bank’s collapse.