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Friday 19th of June 2009
September 29, 2008

Fortis bailed out by three Governments


by Kay Murchie
”Fortis

Belgian-Dutch financial group Fortis has been partially nationalised after concerns were raised about its future health over the weekend.

The group, which is Britain’s third-largest private car insurer, based on volume, and the fourth-largest travel insurer, saw its shares plummet by 35% last week over fears about its future.

However, it has emerged this morning that the Governments of Belgium, Luxembourg and the Netherlands are to invest a total €11.2 billion (£8.9 billion) in the respective Fortis bank institutions in each country. Each Government will take a 49% stake in Fortis.

The rescue comes after no serious bidder could be found for the whole of the Fortis group.

Last month Fortis, which has 2,500 branches across Europe, announced its profits for the January to June period had fallen by 41% to €1.6 billion, compared with the same period last year.

As part of the deal to bailout Fortis, the bank will have to sell its stake in Dutch bank, ABN Amro, which it bought with RBS in October last year.

In addition, the terms of the deal will see chairman, Maurice Lippens, resign. Mr Lippens has been criticised by shareholders for not being upfront about the difficultites at the bank. Furthermore, the bank’s interim chief executive, Herman Verwilst, is to resign and will immediately be replaced by Filip Dierckx.

Jean-Claude Trichet of the European Central Bank said the rescue of Fortis underlined the seriousness of concerns about the integrity of the eurozone’s financial system.

Meanwhile, Fortis’ rival Dexia, saw its shares plummet today after a report in the press said it was seeking extra funding.

A spokesperson for Dexia insisted that the group was in no immediate danger of collapse. Governments in France and Belgium have already announced they will take the necessary action to support Dexia.

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Tags: Belgium, , Governments, Luxembourg, ,

 

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