nrc.nl - International - Features - Investors make future of Fortis uncertain http://www.nrc.nl/international/Features/article2151174.ece/Investors_m...

News, Opinion and Background - Monday 16 February 2009 Subscribe to International Newsletter

International International > Features search

News
Features
Opinion
Elsewhere
Discussion Carnival in Venice: A Passion for Finery
Blog Denglish Joining The Party: Germany Gets its First Turkish
Swaab on brains Carnival Society
Newsletter Picture This: A Swim for Kim
Troubles in Brussels: EU Lacks Ideas and Direction in
News in Dutch
Economic Crisis
Homepage
'It Is Incomprehensible': Merkel Attacks Banker
Bonuses

Zimbabwean billionaires forced into poverty

Shareholders of Dutch-Belgian financial services group Fortis at the meeting in Brussels,
February 11, 2009. Photo Reuters DPP: OK to change PM without election
Seven charged with guinea pig abuse
Investors make future of Fortis Lay judges to disclose interests
uncertain Denmark tops Afghan per capita KIA figures
Published: 13 February 2009 09:26 | Changed: 13 February 2009 12:46

Investors hope voting against the splitting up and dismantling of

Fortis can result in a higher price for the company. But they are ING pulls out of Formula One racing
taking a big risk. Valton Berisha
Africans tackling a global problem
By Heleen de Graaf and Piet Depuydt Africans tackling a global problem
News - Fortis shareholders reject First trial of senior Khmer Rouge leader opens
Angry shareholders have blown the
sale to BNP Paribas
whistle on the board. The investors
consequently got their way, but there is a good chance they may have shot
themselves in the foot on Wednesday.

The shareholders of troubled Fortis Holding voted on Wednesday against

splitting up and dismantling the financial concern. They hope that new
negotiations on the sale of divisions will follow, enabling them to ultimately
get a better price. That is indeed a possibility, but there are far more
scenarios that would signal further disaster for the already plagued Fortis
shareholders.

It is certain that Fortis Holding is in danger of facing an acute deficit of

funds. This is the stock market-listed Fortis which currently contains the
international and Belgian insurance activities plus a stake in a portfolio of
risky investments.

The Dutch Fortis Bank and the insurance branch were nationalised at the
beginning of October. The shareholders also voted against this deal on
Wednesday because they feel a higher price should have been paid. Dutch
finance minister Wouter Bos has repeatedly said that the transaction was
legitimate and he does not want to renegotiate. Various lobby
organisations have since instituted proceedings against Dutch government
with regard to this.

Possible bankruptcy

Court cases against Fortis will continue for a long time yet, especially ones
brought by shareholders seeking compensation. The vote in Brussels on
Wednesday mainly brought uncertainty. Officially the sale of 50.1 percent
to the Belgian state may not go ahead now, nor may the government sell
this banking division on to the French bank BNP Paribas. This actually
means that Fortis has to pay 4.7 billion euros back to the state, money
that it has already received and largely spent.

Fortis Holding itself denies that the veto by the shareholders reverses the
sale to the government. “The contract was signed, the sale has been
executed,” says a spokesperson. This does not refute the fact that the
situation is a legal tangle however. The warning from interim president of
the board of directors Jan-Michiel Hessels about a possible bankruptcy of
the holding still resounds.

1 of 3 2/16/2009 10:33 PM
nrc.nl - International - Features - Investors make future of Fortis uncertain http://www.nrc.nl/international/Features/article2151174.ece/Investors_m...

For the time being, it is a matter of awaiting the outcome of the

shareholders meeting in the Netherlands. Three supervisory board
members who were elected in Brussels must get a majority of the votes at
that meeting as well. Only then can they take up their mandate and will
the Belgian state have a ‘conversation partner’ at Fortis Holding.

The outcome creates a serious dilemma for the new supervisory board.
Strictly speaking, the will of the shareholder cannot be followed because
there is no money to do this. But going against the emphatic opinion of the
majority of its owners does not seem an option either.

Walk away

The Belgian government will probably agree to renegotiate. Although there

is not much chance that it will give the shareholders any gifts. Fortis is still
a major employer in the country and the government will at all times want
to prevent a run on the bank.

The attitude of BNP Paribas is unclear. In a short press release on

Thursday, the French said only that they were glad that so many
shareholders had voted in favour of the deal. Without the ‘no’ vote from
Chinese insurer Ping An – a major shareholder with 4.81 percent of Fortis –
there would have been a majority. Officially the original deal made in
October is still valid until the end of February, but BNP Paribas can walk
away without a penalty if Fortis fails to follow through on parts of the
transaction. And that is precisely the situation that has now been created.

There is certainly a chance that the French bank will decide to walk away
from the transaction. BNP Paribas, which for a long time seemed to be
surviving the financial crisis unscathed, is now also facing tough times. The
bank recently announced it expected a loss of 1.4 billion euros in the fourth
quarter of 2008. The withdrawal of the French would result once again in a
financing problem. The portfolio of risky investments would then largely be
in the hands of Fortis, for which the holding would have to put 6.9 billion
euros on the table.

Lastly Fortis could also lose its Belgian insurance division. These activities,
valued at some 5 to 6 billion euros, are collateral for the government
should Fortis Holding be unable to satisfy the conditions. There is a risk for
the investor therefore that the bank and insurance division will once again
be brought together, but this time as a nationalised company.

Print this article Email this article Feedback

More Features

12:19 Zimbabweans with billions are forced into poverty

Friday 13 February
17:10 Willem Kolff (1911-2009) never won Nobel prize

12:44 Muted protest from the Dutch in latest Wilders affair

09:26 Investors make future of Fortis uncertain

Wednesday 11 February
13:11 Peaceful Pakistan inside university's iron gates

Tuesday 10 February
21:20 Crime world murder trial depends on state witness

Monday 09 February
17:18 Pressure on Dutch government to speed up economic rescue
plan

09:22 Sven Kramer skates to third world title

More Business

11:55 ING to quit Formula One sponsorship

Friday 13 February
16:51 Dutch recession now official

Thursday 12 February
14:47 Israel agrees to Dutch request for Gaza export

Wednesday 11 February
15:45 Fortis shareholders reject sale to BNP Paribas

15:29 More jobs cut at ING in the Netherlands

Monday 09 February

2 of 3 2/16/2009 10:33 PM
nrc.nl - International - Features - Investors make future of Fortis uncertain http://www.nrc.nl/international/Features/article2151174.ece/Investors_m...

Pressure on Dutch government to speed up economic rescue (C) 2007 NRC Handelsblad. NRC Handelsblad is onderdeel van PCM Uitgevers. Andere uitgaven
plan van PCM Uitgevers zijn nrc.next, de Volkskrant en Trouw.

Friday 06 February
19:10 Is removing internet friends really the 2009 trend?

12:16 Later retirement back on the political agenda

NRC sites: nrc.next | Boeken | Carriere | Webwinkel | NRC Focus

| geboorteregister
RSS-feeds | Podcasts | Mobiel | nrc@yoursite
NRC Handelsblad: Over de krant | Auteursrecht | Colofon
Adverteren: Adverteren | 1in3mini | Horizon Reizen | Familieberichten

3 of 3 2/16/2009 10:33 PM