Belgium to support BNP Paribas to pay back the French
The Belgian government has decided to take part in the capital enhancement initiative launched by the French bank BNP Paribas.
Since the Fortis debacle Belgium is BNP Paribas's second largest shareholder.
The operation should not burden the Belgian budget because as a shareholder Belgium has the right to purchase new shares at a reduced rate.
On Tuesday BNP Paribas announced it was creating EUR 4.3 billion worth of new shares. The bank hopes to use the money to repay the French state for public support it gave the bank at the time of the banking crisis.
When Fortis Bank collapsed it was sold to BNP Paribas. In return for its stake in the Belgian bank, BNP Paribas paid Belgium in its own shares.
Belgium could become the bank's biggest shareholder as a result of the operation to repay the French state.
The Belgian government has decided to take part in the capital enhancement to ensure its stake in the French bank is not diluted.
The opposition Flemish Socialist Party is not impressed by the move, accusing the federal administration of acting like an investors' club.
Meanwhile it has emerged that Emiel Van Broeckhoven will sit on the BNP Paribas board as Belgium's second representative. Prof Van Broeckhoven is a lecturer in applied economic sciences at Antwerp University.