The Belgian government yesterday offered to guarantee all new bank financing for one year after it joined forces with France and Luxembourg for the second time in a fortnight to come to the aid of Dexia, the Franco-Belgian bank, say media reports.

Dexia said liquidity problems in the face of all-but closed money markets had caused it to turn to the governments, which became shareholders last week when they clubbed together for a €6.4 billion ($8.7 billion) bail-out of the lender.

The deal came after all-night negotiations in Brussels during which splitting up the bank along national lines was discussed.

The Belgian government has already had to help break up one large banking group by organising the sale to BNP Paribas of Fortis’s Belgian activities this week, following the Dutch nationalisation of its half of the banking and insurance group. Belgium, like many other European national governments, has moved to protect depositors in banks.