The Dexia tower is seen in La Defense, near Paris, November 8, 2012. Belgium and France will pay 5.5 billion euros ($7 billion) to take almost full control of Dexia in the hope this third bailout will be the last for the bank that was once the world's largest municipal lender.

The Dexia board on Wednesday announced it had endorsed an amended plan to dismantle the ailing Franco-Belgian bank and will call an extraordinary meeting next month for shareholders to do the same.

The new plan calls for a change in the way the French and Belgian governments share state guarantees for the bank, but this remains subject to approval by European Union competition authorities.

The deal also calls for a cut in the limit on state loan guarantees to 85 billion euros from 90 billion euros.

Dexia bank operated a retail business in Belgium but its core business was financing public bodies and local authorities in France and Belgium.

It has been mired in crippling financial problems since the beginning of the financial crisis four years ago.

Shareholders France, Belgium and Luxembourg began breaking up Dexia in late 2011 after the bank sought a second bailout to keep it afloat as the global financial crisis morphed into the European debt crisis.

Agreement on the deal from the European Commission in Brussels is expected by the end of the year.

The bank's board and the states involved are calling for a very slow dismantlement of the bank to avoid colossal losses.

Administrator Karel De Boeck told a news conference last week that totally dismantling the bank, a process that began in October 2011, would take almost another century due to its holdings of so-called toxic assets.

Although the troubled lender has shed all of its subsidiaries, in September it remained saddled with a soured portfolio of bonds worth 69 billion euros which had been bought on credit.

A forced sale of part or all of the assets before maturity would trigger “enormous” losses, De Boeck warned.

“A total and immediate liquidation of Dexia is not possible. It would cost a mad amount of money,” De Boeck said. “We think it would be better not to deleverage and not to take losses because these losses can be avoided,” he said.

The extraordinary general meeting, to be held on December 21, “will allow shareholders to pronounce” on the company's future, the bank said in its statement.

Under the deal the French and Belgian governments agree to support the bank with new capital of 5.5 billion euros.

With the bank clinically dead and artificially kept alive, shareholders can expect no dividends or appreciation of their share value. - Sapa-AFP