Fortis shares plunge as breakup blocked
Fortis shares plunged on the Brussels stock market on Thursday after shareholders rejected new efforts to break up the troubled banking group, plunging it into new uncertainty.
The new slide followed a decision on Wednesday by Fortis shareholders to turn down Dutch and Belgian moves to nationalise some assets and sell others off to French bank BNP Paribas.
In an effort to reassure clients, Fortis' banking arm published a full page advertisement in major Belgian newspapers showing a sign hung on a nail that read "open".
"Fortis Bank remains entirely in the hands of the Belgian state," it said. "And with the help of the Belgian state we can concentrate on what really counts: the well-being of our clients."
The "no" votes came despite a warning from group chief executive Jan-Michiel Hessels that "we're threatened by a bankruptcy, which will leave the shareholders empty-handed."
In two votes, the shareholders turned down a decision by the Netherlands to nationalise the group's Dutch assets and narrowly knocked back Belgium's decision to nationalise the Belgian affiliate Fortis Bank.
This meant a rejection of Belgium's decision to sell on 75 percent of its Fortis assets to BNP Paribas.
The votes are unlikely to have any immediate impact as, unless there is a new agreement between the parties, the shareholders would have to take more legal action to get the breakup move overturned.
In newspaper articles, particularly in the Flemish press, Finance Minister Didier Reynders came under heavy fire for the way the shareholders voted.
"The government, primarily minister Reynders, must bear crushing responsibility for this debacle," said an editorial in De Standaard, the daily of reference in the northern region of Flanders.
"The man tasked with the good management of the Fortis dossier has once again caused chaos," the paper said.
Flemish business daily De Tijd said that a "heavy-handed intervention" by the government at the shareholders' meeting had "without doubt helped 'no' supporters."
Reynders was part of the former government that collapsed in December over allegations that then prime minister Yves Leterme's office had sought to influence a court ruling that Fortis was broken up unfairly.
"When things go wrong, people always look for a scapegoat. Every European finance minister lives with that pressure. But I don't see it as a personal failure," Reynders said Thursday on Belgian radio.
The Belgian-Dutch financial services group was broken up in October as the global financial crisis undermined investor confidence. The Dutch state took over its Dutch assets, and Belgium the Belgian banking assets.
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 dismantling of Fortis stripped the publicly traded holding company of its main assets, prompting shareholders to launch court action as their shares became next to worthless.
In December, a Brussels appeal court backed their legal challenge, ruling that the minority shareholders should have been consulted first, and appointing the panel to review the operation.
The terms of the breakup were then renegotiated.