Belgium vows to press on with Fortis sale

By Michael Steen in Amsterdam

Published: December 14 2008 18:10 | Last updated: December 14 2008 18:10

The Belgian government said on Sunday it was “determined” to press ahead with the 14.5bn ($19.4bn) sale of Fortis to BNP Paribas, in spite of a surprise court ruling that freezes the transfer of a majority stake to the French bank.

In a decision late on Friday, that shocked political and business circles, the Brussels Court of Appeal found in favour of a group of shareholders seeking to block the carve-up of Fortis.

It said shareholders should be consulted on management decisions in October that led to the nationalisation of Fortis in the Netherlands and the sale of its Belgian operations to BNP Paribas.

The decision is a blow to BNP Paribas, which had hoped to complete the transaction this month. BNP, which stands to become the eurozone’s biggest bank by deposits, said it wanted to close the deal “efficiently and quickly”.

The Belgian government, which has taken Fortis Bank in Belgium into public ownership as an interim step, will review its legal options, including a possible Supreme Court appeal and other procedural challenges.

It is still free to transfer a 49.9 per cent stake to the French bank.

“We shall continue,” Didier Reynders, finance minister, told reporters on Saturday.

“The government has the same aim as before – to protect deposits but also a real will to press ahead with an industrial solution for Fortis Bank.”

A spokesman added that the government was “determined to complete the sale” to BNP.

Although the period between October 3 and 6 that is covered by the ruling includes the nationalisation of Fortis north of the Dutch-Belgian border, that transaction is complete. The Dutch finance ministry said the ruling had “no consequences” for the nationalisation.

The case is among several brought by angry retail shareholders, principally in Belgium, who have seen the value of their shares plummet to below €1 from €34 early last year and have ended up owning a radically diminished company.

The court of appeal ordered a block for 65 days on the transfer of government-held shares equivalent to 50.1 per cent of Fortis Bank, preventing the completion of a deal that foresees BNP holding 75 per cent of the stock.

The court also appointed five experts to write a report on the terms of the deal.

The carve-up of Fortis followed an attempted €11.2bn bail-out of the group by the Belgian, Dutch and Luxembourg governments at the end of September. The Dutch government cited a liquidity crisis when it stepped in a week later to buy Fortis in the Netherlands.

Fortis Group, which will consist of an international insurance arm and a stake in a pool of “toxic” structured credits after the sale to BNP, said it had been surprised by the court ruling but believed the break-up would be successful.