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UPDATE 1-Dexia sees tough 2010, to refocus on retail banking
* Sees tough 2010 compared with 2009
* Majority of future revenue to come from retail bank
* No EU restrictions on directors' pay
(Adds detail throughout, further CEO comment)
PARIS, Feb 7 (Reuters) - Financial services group Dexia SA (DEXI.BR), which won European Union approval for its restructuring last week, said on Sunday it was expecting 2010 to be a tough year and would focus on retail banking in future.
On Friday, the French-Belgian bancassurer pledged to cut its balance sheet by 35 percent by 2014 from the 2008 level as part of a restructuring deal with the European Union.
Dexia, which received a bailout from Belgium, France and Luxembourg in 2008, said it would divest activities in Italy, Spain and Slovakia, as well as its insurance business in Turkey.
It also pledged to cut its short-term borrowing to 10 percent by 2014.
Dexia Chief Executive Pierre Mariani said that in future, 60 percent of group revenue would come from retail banking.
Asset management would account for 20 percent, while its financing work for local government authorities would represent the remaining 20 percent.
"We will once again become a bank with a very strong retail presence," Mariani told reporters at a briefing in Paris. "We will continue to open up new retail branches and we will go out to win back the confidence of our clients."
EXPECTING DIFFICULT YEAR
Mariani said 2010 would be a difficult year for Dexia compared to 2009 since the company was expected to generate less revenue from its financial market activities.
Dexia, a leading lender to local authorities, suffered during the financial crisis since a large part of its long-term lending relied on short-term interbank borrowing, a market which dried up during the credit crunch.
It ended up having to get a 6.4 billion euros ($8.8 billion) rescue package from Belgium, France, Luxembourg and other key shareholders in September 2008 after its financial stability was rocked by the credit crisis.
It later won state guarantees for its new borrowing and to cover riskier securities linked to subprime mortgages.
It has already sold off its loss-making U.S. bond insurer Financial Security Assurance (FSA) to Assured Guaranty (AGO.N) and a 20 percent stake in French bank Credit du Nord to rival Societe Generale (SOGN.PA).
The European Commission has imposed a series of sanctions on bailed-out EU financial groups, although ING Group NV (ING.AS) last month said it and the Dutch government would mount a challenge to restrictions it called disproportionate. [ID:nLDE60R2R5]
Mariani said the Commission had not imposed any restrictions concerning the salaries of Dexia directors as part of the restructuring deal, although it has imposed restrictions on Dexia's dividends and acquisition plans for the next two years.
French state-owned financial institution Caisse des Depots (CDC), Dexia's largest shareholder with a 17.6 percent stake, said last month it was strongly opposed to a break-up of Dexia.
Dexia shares fell 5 percent to 4.03 euros on Friday, giving the group a market capitalisation of around 7.1 billion euros. (Editing by David Holmes) ($1=.7292 Euro)
