The plan, drawn up by major shareholders Belgium, France along with Luxembourg, includes 85 billion euros in state loan guarantees and 5.5 billion euros of fresh capital to carry it through the restructure.
Dexia, which had to be bailed out in 2008 and 2011, will have its core banking business closed down, leaving behind two smaller financial businesses.
Belfius, now owned by the Belgian state, will focus on retail banking and insurance, while the Dexia Municipal Agency will be folded into a new development bank in France to provide local government funding.
The European Union Competition Commissioner, Joaquin Almunia, said the restructuring plan “ensures that the continued market presence of some parts of the Dexia group is truly justified…and that competition distortions resulting from the aid received are minimised.”
“The plan brings the cost for the taxpayer down to the level strictly necessary to carry out the orderly resolution process.”
Dexia once had assets of around 300 billion euros.
It operated a retail business in Belgium but its core business was financing public bodies and local authorities in France and Belgium.
The bank was over-exposed during the global financial crisis and was unable to raise enough capital.
France, Belgium and Luxembourg decided to break up Dexia in 2011 after it sought its second bailout.
Dexia recorded a third quarter net loss of 1.2 billion euros, leaving it with negative shareholder funds, meaning it had no more capital.