* 6 bln euro stake could be sold within year - bankers
* Foreign bidder interest, convertible could avert loss
* Other state-held banks could follow suit
By Lionel Laurent
PARIS, Feb 4 A market rally has raised
expectations that Belgium will sell its six billion-euro ($8.2
billion) stake in French bank BNP Paribas, leading the
way for other indebted governments to recoup bank bailout funds
from the 2008 financial crisis.
Banking sources say no official talks have begun but some
see a deal happening within the year. A successful sale could
encourage other countries with significant bank stakes such as
Britain and the Netherlands to follow suit.
"It's possible that a deal will happen this year," an
advisory banker familiar with the matter said. "Belgium needs
the funds and there is still a bit of upside left in BNP's
Belgium's economy has only seen one quarter of growth in the
last six, pressuring the government to find new ways to cut the
public deficit, while BNP's share price has soared more than 30
percent over the past 12 months. The STOXX Europe 600 banks
index is up 12 percent over the same period.
"Talks have not yet officially begun on this," another
banker said, but added that further share gains would bring the
Politician Wouter Beke flagged a potential sale in December,
telling Tijd newspaper that Belgium's aim was not to remain a
shareholder of BNP and that the timing of the sale would depend
on the stock market.
"It would make sense for Belgium, even if the timing is not
clear," said Yohan Salleron, fund manager at Mandarine Gestion
Belgium took its 10 percent stake at 68 euros per share in
2008 as part of BNP's rescue of collapsed Benelux bank Fortis,
seen today as one of the French bank's canniest acquisitions.
BNP shares today trade almost one third below that level,
meaning Belgium would actually lose money at market prices, but
investors and analysts say that interest from foreign bidders
willing to pay a premium or the use of a convertible bond could
offset this. An extended rally could also bump up the price.
"The shares could be sold to Russian or Chinese banks ... or
sold via a convertible bond," said Yannick Naud, portfolio
manager at Glendevon King Asset Management. "Given the current
market (rally), a strike price at 20 to 30 percent above today's
levels is possible."
Cash-rich, sovereign-wealth funds from the Middle East or
Asia, such as Singapore's Temasek, would be the likeliest buyers
for the stake given its size, according to fund managers and
Qatar was mooted as a possible investor in BNP during the
euro market panic of late 2011, although the French bank at the
time denied reports that discussions had begun.
Jaime Ramos Martin, investment director at Standard Life
Investments, said he would consider taking part in a placement
given BNP's strong capital base and the expectation it will
resume normal dividend payments this year.
"I'd obviously say it depends on the price but we are
positively predisposed," he said.
"I think 10 percent might be too much for a sovereign
investor, but who knows? Has the market got appetite for 10
percent of BNP? I would be inclined to think, 'Yes'. It would be
great to find a cornerstone investor to take 5 percent, then
it's only 5 percent you need to place in the market."
The Belgian finance ministry and BNP Paribas declined to
Some say BNP will not be an isolated case. Smaller Belgian
bank KBC took advantage of the boom in bank shares late last
year by raising capital to repay state bailout money; it will
also buy back shares held by the Flemish authorities this year.
Other examples of banks that could see governments reduce
their holdings if the rally continues include Dutch lender ABN
Amro, Icelandic lenders and UK banks RBS and Lloyds
- all rescued by the state in the wake of the 2008
crisis that brought down U.S. investment bank Lehman Brothers.
"These countries are not logical owners of the stakes but
the timing of the exits will vary," an advisor to sovereigns
The problem for some countries is that selling right now
would mean losses for the taxpayer - including in the U.K.,
where over $100 billion was spent rescuing RBS and Lloyds - and
bankers say governments may simply choose to wait it out or use
a convertible bond structure to avoid unnecessary pain.
"The UK has clearly said they wouldn't want to sell these
stakes unless they make a profit for the taxpayer," said
Espirito Santo analyst Shailesh Raikundlia.
In some countries the state is having to get even deeper in
hock to its banking sector, rather than the reverse. The
Netherlands nationalised SNS Reaal in a $14 billion rescue on
Friday, Italy's scandal-ridden Monte Paschi has asked
for aid and Franco-Belgian Dexia has new guarantees.
"This is a long road back for European banks and one of the
obstacles in that road is placing equity stakes," said John
Bennett, director of European equities for Henderson Global
Underpinning the optimism is a benign stock market
environment that may not last forever, warned Bennett.
"The window will only be open for a few months, maybe
($1 = 0.7301 euros)
(Additional reporting by Philip Blenkinsop in Brussels and
Sinead Cruise in London; Editing by Carmel Crimmins and Tom