BNP Paribas pays EUR 14.5 billion for troubled Fortis

6 October 2008

PARIS — French bank BNP Paribas will pay EUR 14.5 billion (USD 19.7 billion) to take over the majority of the troubled insurance and banking giant Fortis in Belgium and Luxembourg, BNP Paribas said on Monday.

The deal, which involves EUR 9 billion worth of shares and EUR 5.5 billion in cash, includes the purchase of 75 percent of Fortis from the Belgian government and 16 percent of Fortis Luxembourg, which raises BNP’s stake in the Luxembourg segment of Fortis to 67 percent.

As part of the deal, the Belgian government first purchased 100 percent of Fortis’s Belgian activities. As a result, Brussels will retain an 11.6 percent stake in BNP Paribas.

In addition, the Dutch government acquired all of Fortis’s insurance and banking business in the Netherlands.

By taking over EUR 239 billion worth of deposits in Belgium and Luxembourg, BNP Paribas becomes the leading bank in the two countries and the largest savings deposit bank in the euro zone.

On September 28, in a desperate move to save the bank, the governments of the Netherlands, Belgium and Luxembourg had partially nationalized Fortis by purchasing 49 percent of its businesses in their respective countries, supplying the bank a total of EUR 11.2 billion to help keep it afloat.

The bailout provided the bank with the funding it had desperately needed since its joint takeover, along with the Royal Bank of Scotland and Spain’s Banco Santander, of ABN Amro in October 2007.

In June 2008, Fortis had publicly announced its need for substantial extra funding.

[dpa / Expatica]

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