Benelux bails out Fortis

29th September 2008, Comments 1 comment

To avoid financial crisis, the Netherlands, Belgium and Luxembourg will pay millions to nationalise Belgian-Dutch bank Fortis.

29 September 2008

AMSTERDAM -- The Netherlands, Belgium and Luxembourg will take over large parts of Belgian-Dutch banking and insurance company Fortis, it was reported Monday following two days of meetings between Benelux officials and Fortis management in Brussels.

The Dutch government will take over 49 percent of the insurance company, for which it will pay EUR 4 billion. The Dutch banking division ABN Amro will be sold.

The Belgians will take over 49 percent of the banking division, paying EUR 4.7 billion.

Luxembourg will take over 49 percent of all divisions located in its country, paying EUR 2.5 billion.

Dutch Finance Minister Wouter Bos said following the meeting that Fortis remains a dependable bank.

"We feel obligated to keep a bank like Fortis going in difficult times like these", he said.

Bas said that the Benelux governments had to help, as Fortis' position was "very vulnerable".

"We could also not have intervened, but the question was if Fortis would have survived Monday morning", he said.

The Dutch government's participation in Fortis will continue "for as long as necessary to regain the confidence".

The Dutch consumers association Consumentenbond early Monday emphasised the importance of Fortis' Dutch banking division ABN Amro being bought by a Dutch and not a foreign bank, to protect account holders. Foreign banks can negotiate Dutch central bank contracts for account holders, but are not required to do so.

Carla Kiburg, manager of the largest Dutch union FNV Bondgenoten, acknowledged Fortis' problems.

"We knew things were not going too well recently", she said. "Now there is some slight hope again that ABN Amro can survive partially or in its entirety".

A spokesman for workers union De Unie expressed concern over "uncertainty for 22,000 ABN Amro employees".

It would be "unbearable if the government would save account holders and shareholders but leave employees standing in the rain", he said. "A social plan is needed".

Frans de Neree, a member of the government coalition party Christian Democrats, said he wanted "more details" about the nationalisation plan.

"It is absolutely unclear what will happen to ABN Amro", De Neree said.

Legislator Ewout Irrgang of the leftist Socialist Party, one of the largest opposition parties, wondered why the Dutch state invested a large amount in Fortis but took an interest of "only 49 percent in the insurance company rather than a controlling interest of 51 per cent".

Legislator Frans Weekers of the Liberal VVD party, one of the larger opposition parties, expressed "mixed feelings" about the rescue plan for Fortis.

"Nationalising a substantial part of a private enterprise is a drastic move", he said. "But it had to happen".
[Dpa / Expatica]

1 Comment To This Article

  • tony posted:

    on 29th September 2008, 18:53:49 - Reply

    looks like euro zone is heading for recession too, hold tight......