BNP takes over Dutch-Belgian bank Fortis

Fortis, the nationalised Belgo-Dutch bank and largest private employer in Belgium. This is a good thing as I have a distinct preference for mergers over bankruptcy or long-term nationalisation as a way to hep consolidate and rationalize the global financial services industry. Let’s hope that the new BNP Paribas, an amalgamation of Banque Nationale de Paris, Paribas and now Fortis, is a strong institution.

BNP Paribas, the French bank, will take control of the remaining assets of Fortis after the Belgian government was forced to find a buyer following the shock Dutch nationalisation of its part of the troubled banking and insurance group.

The all-share deal, announced on Sunday night by the Belgian government, is set to make BNP the biggest bank in the eurozone by deposits and will over time make Belgium and Luxembourg shareholders in the French bank.

There was no immediate word on how much BNP will pay for Fortis Bank in Belgium, Luxembourg, the Belgian insurance operations and its Turkish banking unit.

The Belgian government is to keep a blocking minority of 25 per cent in Fortis Bank and its subprime and related assets will be moved into a special vehicle, according to Belgian media.

There had been fears that the Dutch nationalisation would cause a fresh rout in shareholder confidence unless a solution was found by the opening of trading on Monday.

In a second weekend of tumult for Belgian banks, Dexia, which was bailed out by France, Belgium and Luxembourg last week, was forced to state that its credit links to Hypo Real Estate, the crisis-hit German company, would have ”a very limited impact” on the group’s solvency.

Belgium’s race to sell Fortis followed the controversial decision on Friday by the Dutch government to take full control of all of Fortis’s operations on its side of the border for €16.8bn ($23.2bn, £13bn), including the parts of ABN Amro bought by Fortis last year.

That left in tatters an agreement drawn up the previous weekend that had been heralded as an example of harmonious co-operation by the Dutch, Belgian and Luxembourg governments.

Under the initial deal, each country was to take a 49 per cent stake in the respective country banks of Fortis, leaving the healthy insurance operations fully owned by shareholders.

But the Dutch government managed to renegotiate on Thursday and Friday as, unlike Belgium and Luxembourg, it had not yet paid the €4bn for its share.

Source
BNP to take control of Fortis – FT