Under the deal, the Belgian government will buy all remaining shares in Fortis Belgium and then sell 75 per cent of its stake to BNP Paribas. -- PHOTO: AFP
BRUSSELS - FRENCH banking giant BNP Paribas will take a majority 75 per cent share of troubled bank Fortis NV, the Belgian government announced on Sunday.
Ping An to record S$4.67b loss
BEIJING (AP) - PING An Insurance, one of China's biggest insurers, said on Monday it will record a US$2.3 billion (S$4.67 billion) loss on its stake in troubled European bank Fortis NV.
The writedown was the biggest blow yet for a Chinese financial institution from the Western credit crisis. It was a setback to one of the most ambitious foreign acquisitions to date by China's fast-growing banks and insurers.
Prime Minister Yves Leterme said the Paris-based bank would take controlling interest in all of Fortis' Belgian and Luxembourg operations, including the bank's insurance and investment arms, but Belgium and Luxembourg will in turn take a blocking minority share in BNP Paribas.
'No client or depositor (at Fortis) will end up in problems due to the financial crisis,' Mr Leterme told reporters on late Sunday after two days of closed-door talks between BNP Paribas and government officials.
Mr Leterme said he was keen to have another bank take over troubled Fortis to restore confidence in the company before markets open on Monday.
The bank has been caught up in the financial credit crisis and has faced weeks of plummeting stock values amid fears it would go insolvent.
A previous bailout last week, which left Belgium and Luxembourg with 49 per cent share stakes each in Fortis, failed to quell widespread concerns over the bank's solvency.
Under the deal, the Belgian government will buy all remaining shares in Fortis Belgium for US$6.5 billion (S$9.5 billion) and then sell 75 per cent of its stake to BNP Paribas for US$11.4 billion in turn for a blocking 11.7 per cent minority share in BNP Paribas. Luxembourg will get a 1.4 per cent share in BNP.
Mr Leterme said the minority stakes in BNP would also ensure the government can ensure the French bank does not move to cut jobs at Fortis. The bank currently employs some 25,000 in Belgium.
Banking officials and authorities have been in closed-door talks all weekend in an effort to restore credibility and trust in Fortis after Dutch government announced on Friday it was buying Dutch-held operations of the bank for US$23.2 billion after a previous bailout failed to remove market doubts.
The Dutch move effectively split Fortis in two along national lines but led to renewed concerns that Fortis' remaining operations continued to suffer.
Mr Leterme assured account holders last week that the Belgian government would not allow the bank's operations there to go under.
Fortis, once one of Europe's largest financial companies, has been in escalating trouble since it agreed to purchase the Dutch banking operations of ABN Amro last year for US$33 billion as part of the largest takeover in banking history.
The company's share values have plummeted some 70 per cent since January as a result. Its share value closed down on Friday, and stood at US$7.50.
Meanwhile French-Belgian bank Dexia SA insisted on Sunday that the failed bailout of German lender Hypo Real Estate would only have a 'very limited impact' on its own solvency.
It said last week's government and shareholder injection of US$9.2 billion would allow it to weather 'deteriorating conditions.' -- AP
