BNP Paribas announced yesterday that it is taking control of ailing finance group Fortis's operations in Belgium and Luxembourg, in a deal which will make Belgium the largest shareholder in the French bank.
In Ireland, Fortis and An Post jointly own PostBank.
The deal, thrashed out over a weekend of intense talks, leaves the Belgian and Luxembourg governments with reduced holdings in Fortis, which they partly nationalised a week earlier, in exchange for part of BNP Paribas, which becomes the biggest bank in Europe in terms of deposits.
The news came on the eve of a meeting of European finance ministers in Luxembourg, who will seek to flesh out broad plans for restoring confidence in the crisis-struck banking system, agreed over the weekend by Europe's biggest economic powers.
Under the Fortis deal, announced by Belgian and BNP officials in Brussels and official sources in Luxembourg, France's biggest bank will take up to 75% of the company's Belgian operation leaving the other 25%, a blocking minority on strategic decisions, in the hands of the Belgian government.
On the Luxembourg side, BNP Paribas will take 66% of the shares leaving the Grand Duchy with 33%, the source said. On Friday the Dutch government totally nationalised the group's Dutch arm.
BNP Paribas Managing Director Baudoin Prot said the deal would be financed by BNP Paribas shares, with the Belgian state taking a stake of around 11.7% in the French bank, making it the largest shareholder. Prot added that Luxembourg would assume a 1.1% stake in BNP Paribas in a similar fashion.
BNP Paribas put the value of the operation at €14.7 billion. It will also take over Fortis insurance activities for €5.7 billion. However, the French bank said it would not be taking over €10 billion of Fortis' risky assets, which have been placed into a separate structure under the control of the Belgian and Luxumbourg governments.
BNP Paribas did, though, pick up a network of 1,500 bank branch offices in Belgium, Luxembourg, France, Germany, Poland and Turkey, making it the 'leading European bank in terms of deposits', according to a bank statement.
The moving of most of Fortis to one of Europe's biggest financial groups is just the latest episode in the efforts to save the Belgian-Dutch banking group.
Under an original, hastily arranged rescue deal a week earlier, Belgium, the Netherlands and Luxembourg announced a €11.2 billion part-nationalisation of Fortis to prevent the US-driven financial crisis from claiming another victim in Europe.
Belgium made the biggest contribution, taking a 49% stake in the Belgian arm of the company, for €4.7 billion. Then on Friday the Dutch government announced it was totally nationalising the Dutch arm of the group.
That move left the Belgian and Luxembourg arms appearing weak, and there were fears of more freefall when the stock markets opened today.
Fortis, caught up in the US-born international financial crisis, has seen nearly 70% of its share value wiped out this year.
