Fortis shareholders reject break-up of ailing Belgian bank

12th February 2009, Comments 0 comments

Fortis shareholders plunged the troubled banking group into new uncertainty Wednesday.

BRUSSELS - Fortis shareholders plunged the troubled banking group into new uncertainty Wednesday, rejecting Dutch and Belgian moves to nationalise some assets and sell others off to French bank BNP Paribas.

On Tuesday group chief executive Jan-Michiel Hessels warned that "we're threatened by a bankruptcy, which will leave the shareholders empty-handed" if they voted against the carve-up.

In the first "no" vote at a general meeting in Brussels, shareholders rejected a decision by the Netherlands to nationalise the group's Dutch assets.

In a second vote the shareholders narrowly voted against Belgium's decision to nationalise the Belgian affiliate Fortis Bank, also rejecting the Belgian state's subsequent decision to sell on 75 percent of its Fortis assets to BNP.

The votes were greeted by loud applause in the meeting hall among shareholders who have seen the value of their holdings drop by 90 percent over the last 12 months.

Trading in Fortis shares was suspended Wednesday due to the meeting.

Belgian Prime Minister Herman Van Rompuy, who took up his post in late December after a Fortis-linked scandal toppled his predecessor, said his government took note of the shareholders' decision.

"The state is the 100 percent owner of Fortis Bank," he stressed.

"Savers and staff should have no worries" about the shareholders' actions, he added from Berlin, were he was meeting German Chancellor Angela Merkel.

There was a similar message of reassurance from the Netherlands.

The general assembly vote "does not affect the validity" of the nationalisation, a Dutch finance ministry spokesman insisted.

The three transactions, agreed last October without shareholder input, came at the height of the financial crisis, with investor confidence shattered in the Belgian-Dutch financial services group after it was hit by the US sub-prime loan crisis.

The Dutch state took over its Dutch assets and Belgium the Belgian banking assets.

Two days later the Belgian state then orchestrated the sale of Fortis's Belgian banking assets and 75 percent of its Belgian insurance business, still owned by the holding company, to BNP Paribas.

The deals effectively dismantled Fortis and left investors holding an interest in rapidly plummeting shares in the rump of what had been considered among the bluest of Belgian blue chips.

However in December, a Brussels court suspended the sale of the Belgian assets to BNP Paribas, saying the shareholders should have been consulted.

Fortis' largest shareholder, China's Ping An Insurance, has said it would vote against a revised bid by BNP Paribas to take over the collapsed Belgian bank.

The Democrat-Humanist Centre (CDH) party, part of the coalition government, blamed "foreign shareholders" mainly "Chinese and Dutch" of having acted against the interests of the Belgian state in rejecting the rescue package.

In total just 20.32 percent of the company's capital was represented at the shareholders' meeting of one of the biggest finance houses in the Benelux region.

Before the meeting, Fortis had in effect stated that in the event of a "no" vote the original transactions made in October could only be overturned through agreement by the parties concerned or through a court decision declaring them to be null and void.

BNP and the two states could take legal action to force the Fortis holding group to honour the transactions or claim damages if this were not the case.

BNP head Baudouin Prot had warned that his group will quit the whole process "unless things get swiftly unblocked."


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