French Bank to Take Control Of Belgium's Ailing Fortis
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Monday, October 6, 2008
BRUSSELS, Oct. 5 -- French banking giant BNP Paribas will take a 75 percent stake in the remaining operations of troubled bank Fortis, the Belgian government announced Sunday.
Prime Minister Yves Leterme said the deal gives the Paris bank control of Fortis's Belgian and Luxembourg operations. The Belgium and Luxembourg governments also will get a blocking minority share in BNP Paribas.
"No client or depositor (at Fortis) will end up in problems due to the financial crisis," Leterme said late Sunday after two days of closed-door talks between BNP Paribas and government officials.
Leterme said it was important for another bank to take over troubled Fortis to restore confidence in the company before markets reopen Monday. The bank's stock has plummeted in recent weeks amid fears that it could be declared insolvent.
A previous bailout last week, which left Belgium and Luxembourg with 49 percent share stakes each in Fortis failed to quell widespread concerns over the bank's solvency.
Under the deal announced Sunday, the Belgian government will buy all remaining shares in Fortis Belgium for $6.5 billion and then sell a 75 percent stake to BNP Paribas for $11.4 billion and receive an 11.7 percent minority share in BNP Paribas. Luxembourg will get a 1.4 percent share in BNP.
