100 percent state guarantee for savers
The leader of Belgium's largest government party, Marianne Thyssen, says the Belgian state is guaranteeing the safety of savings.29 September 2008
BELGIUM -- Talks are continuing to find a solution for Fortis's woes. The share price of Belgium's largest bank came under sustained pressure on the stock exchange Friday amid speculation the bank was unable to get hold of fresh cash.
The Belgian Dutch financial group that combines both banking and insurance activities is in need of cash to pay for its share of the take over of the Dutch bank ABN Amro.
Fortis officials, representatives of other banks, Belgian politicians and members of the bank commission are all involved in the talks.
On Saturday evening the Belgian inner cabinet met for two hours to discuss the plight of Fortis.
On Sunday afternoon Finance Minister Didier Reynders (Francophone liberal) told Walloon radio that he was in contact with the banking authorities and the Dutch, Luxembourg, and French governments.
On Sunday afternoon Premier Leterme (Flemish Christian democrat) met with Jean-Claude Trichet, the president of the European Central Bank.
The Belgian cabinet also met at 6PM on Sunday.
All commentators suggested that a solution needed to be found before the bourse opens on Monday. (In practice the deadline is 10 PM on Sunday in Belgium when the Australian stock exchange opens).
Various options are still open: a takeover of Fortis by a foreign player like France BNP Paribas, or ING of the Netherlands. Fortis could also sell its insurance division.
Capital injections from other banks, or an intervention by Belgium’s central bank or the European Central Bank, are also a possibility.
There is even speculation about a possible nationalisation of Fortis. (Fortis is, of course, the result of a merger between the public bank ASLK and Generale Bank).
The bank could be nationalised as part of a deal under which certain parts of the bank will later be sold on.
BNP Paribas and ING are said only to be interested in parts of Fortis.
The Dutch and French governments have reportedly also been involved in the talks.
On Sunday morning the leader of PM Yves Leterme's Flemish Christian democrat party Marianne Thyssen said that the government would provide a full guarantee that money on savings and term accounts are safe.
How well are your savings guaranteed?
The government is worried many savers could now withdraw their savings and trigger a rush on the bank.
At the moment savings on savings accounts are guaranteed to the tune of EUR 20,000, but the government acknowledges that this might not be sufficient and wants to widen this guarantee.
Investments entrusted to the bank are also guaranteed separately to the tune of EUR 20,000.
The guarantee is provided by the National Bank's guarantee fund that is financed by a levy on all the banks operating in this country.
The guarantee fund was established in 1998 after the Max Fischer Bank that operated in the Antwerp Diamond circuit went bust.
[flandersnews.be / Expatica]