The Dutch operations of Fortis, Europe’s largest victim of the credit crisis, have been nationalised in a €16.8bn (£13bn) deal aimed to calm investors in the troubled banking and insurance group.
Fortis is Europe’s largest victim of the credit crisis Photo: AFP
The Netherlands government stepped in to take over the assets, including buying Fortis’ interest in ABN Amro – the Dutch investment bank it jointly acquired last year in a consortium with Royal Bank of Scotland and Banco Santander. Shares in Fortis have tumbled almost 70pc this year as fears mounted that it had overstretched itself through its €24bn participation in the ABN Amro transaction.
Yesterday’s deal replaces an agreement struck on Sunday by the Belgium, Dutch and Luxembourg governments to rescue Fortis by pumping €11.2bn into the Belgian-Dutch bank. Under that deal, they would have taken a 49pc stake in the bank’s operations within each of their borders.
This new transaction, which has been approved by the Dutch Central Bank, was announced after the Euronext market closed. Fortis’ shares had earlier closed down 0.79pc to €5.42.
Belgian Prime Minister Yves Leterme said the decision was “aimed at maintaining the durable solvency” of the banking and insurance group, which has become the first major banking casualty in the Euro zone of the global credit crunch.
Dutch finance Minister Wouter Bos added that the move to fully nationalise the bank’s Dutch operations was needed to prevent “the danger of infection” as investors still lacked confidence in Fortis, despite the bailout package announced earlier this week.
“We have today ensured that savers and clients know their money is in safe hands in our banks,” he said, explaining that savers had been withdrawing their money from Fortis and that other lenders were refusing to lend to the ailing bank.
The nationalistion package comes just days after Fortis warned that the €2.15bn sale of its asset management arm to China’s Ping An Insurance was likely to collapse due to “severe market disruption and the ongoing uncertainty in the global capital markets”. It had also said the Dutch Central Bank had not approved its sale of several ABN Amro assets to Deutsche Bank for €709m.
By Yvette Essen, Insurance Correspondent
Last Updated: 10:18PM BST 03 Oct 2008
Source: The Guardian