6 October 2008

AMSTERDAM -- The Dutch, Belgian and Luxembourg governments agreed to break up troubled bank Fortis, the bank confirmed in a statement on Friday evening.

The Dutch government bought the bank's financial and insurance operations in the Netherlands for EUR 16.8 billion, the bank confirmed in a statement.

"After this transaction, Fortis Group entails Fortis Insurance Belgium, Fortis Insurance International and the banking activities excluding Fortis Bank Nederland (Holding)", the statement said.

The agreement between the governments of the three countries splits Fortis into separate Dutch and Luxembourg-Belgian businesses.

On Sunday, the governments of Belgium, Luxembourg and the Netherlands nationalised 49 percent of Fortis.

The Dutch government then took over 49 per cent of all Fortis activities in the Netherlands, paying EUR 4 billion.

The new deal involves a takeover of all Fortis activities in the Netherlands.

Also, Sunday's planned sale of Dutch ABN Amro bank, taken over by Fortis in 2007 but still operating independently within Fortis NV until late 2009, was cancelled.

Instead, Dutch central bank (DNB) president Nout Wellink said the integration of ABN Amro and Fortis, as planned following the merger of the two in 2007, would continue.

"The integration will only be easier and more efficient now that the company has become less complicated", Wellink said, adding that the full integration would create EUR 1 billion per year, money that will help the troubled bank.

Rather than ABN Amro merging into Fortis, it is now expected that Fortis will merge within ABN Amro, still the bigger of the two banks in the Netherlands.

Fortis and ABN Amro combined employ 45,000 workers, who are now Dutch civil servants.

Speaking at a press conference on Friday, Dutch Prime Minister Jan Peter Balkenende said the new deal was "necessary in order to create stability on the financial markets".

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