News | Wednesday, 01 October 2008

Governments buy out 49 per cent stake in beleagured Fortis

Fortis was thrown an €11.2 billion lifeline on Monday night as the Belgian, Dutch and Luxembourg Governments combined to inject capital into the embattled banking and insurance group in a last-ditch effort to shore up confidence among savers.
The partial nationalisation was announced in Brussels by Yves Leterme, Belgium’s Prime Minister, after a frantic weekend of talks involving ministers, central bankers and financiers.
Under the terms of the deal, the Belgian, Dutch and Luxembourg Governments will inject capital to buy 49 per cent of Fortis’s banking subsidiaries in each of the three countries.
Fortis was also expected to sell its stake in ABN Amro, the Dutch lender it agreed to buy as part of a break-up bid last year. Maurice Lippens, Fortis’ chairman, was expected to step down as part of the deal.
Fortis is the largest European financial institution to be bailed out as a result of the turmoil in the credit markets. The group, a giant of the Belgian and Dutch financial landscape, had become the latest focus of investor fears about the stability of the industry after ructions on Wall Street.
The decision to partly nationalise Fortis came after attempts to sell all or part of the group to BNP Paribas of France or ING of the Netherlands broke down when the Governments balked at their demands for guarantees against possible future losses.

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