Dexia gets 6.4 bln euro rescue

By Philip Blenkinsop and Ingrid Melander

BRUSSELS (Reuters) - Franco-Belgian bank Dexia (DEXI.BR)(DEXI.PA) won a 6.4 billion euro (5.06 billion pounds) public bailout on Tuesday and its chief executive and chairman quit as a deepening global credit crisis shook European banks.

Following all-night negotiations convened just a day after the rescue of Dutch-Belgian bank Fortis (FOR.BR), the Belgian government announced that it and other stakeholders would invest 3 billion euros in Dexia, the French government 1 billion euros and French state-controlled Caisse des Depots (CDC) 2 billion euros.

Luxembourg would also invest 376 million euros in Dexia, formed in the 1990s out of Belgian and French municipal lenders.

"There was no other choice and we made a choice of preserving the interest of ... the common people that have given their money to the banks as savings and to protect employment," Belgian Prime Minister Yves Leterme told Reuters television.

The authorities and key shareholders subscribed at 9.90 euros, the average closing price for the last 30 days.

Dexia's shares, which fell by nearly 30 percent on Monday, rose sharply after the news. At 1216 GMT, they were up 9.6 percent at 7.75 euros

Dexia had the third highest credit default swap (CDS) spread on five-year senior debt -- which reflect a market view on the risk of it defaulting on loans -- among European banks on Monday at the close, at 542 basis points after Bancaja's 648.3 and Depfa's 836.

The Dexia spread had tightened to about 500 on Tuesday.