Shockwaves from Thames Water reach Belgium

Belfius and Dexia are both heavily exposed to British water company Thames Water, which is in poor financial shape.

Thames Water, the UK’s largest water company, with 15 million customers, is weathering a financial storm. The company, which operates the water and sewer network in and around London, sits on a huge mountain of debt of nearly £15billion (17.5 billion euros) and desperately needs new money. Interest payments on more than half of this debt are linked to inflation, which has soared over the past year.

To secure much-needed cash, Thames Water has begun talks with its shareholders. She is looking to get £1billion as a first step. But this search is not without obstacles. If the company fails to obtain additional funds, the scenario of a nationalization (temporary) is on the table.

The case also has a link with Belgium, because today we learn that Belfius and Dexia are – allegedly through bonds – heavily exposed to Thames Water. According to our information, the exposure of the two banks amounts to hundreds of millions of euros.

The file illustrates the unbridled growth strategy of the Dexia group which, before its implosion, financed all sorts of international (infrastructure) projects and local authorities to become one of the very first players in this business, whereas the group did not have stable funding to do so.