BCP sees Fortis keeping Portugal insurance JV
LEIRIA, Portugal, Oct 2 (Reuters) - Millennium bcp (BCP.LS), Portugal's largest listed bank, expects Belgian-Dutch financial group Fortis (FOR.BR) to keep its 51 percent stake in a local insurance joint venture after a rescue package and asset sale.
"I believe Fortis is solid enough so as not to feel obliged to sell what it considers its best foreign operation, that is in Portugal," BCP chief executive, Carlos Santos Ferreira, told reporters.
Millenniumbcp Fortis is a holding company that controls insurer Ocidental, health insurance company Medis and pension fund Pensoes Gere. It is the leading life insurer in the Iberian country. "With the help it got from the Benelux governments I don't think Fortis feels any need to sell its insurance business," he said, adding, though, that BCP had preference rights to buy the stake if Fortis were to sell.
Earlier this week Millennium bcp said many companies were interested in replacing Fortis if needs be in their joint venture, which has a solvency ratio of 170 percent.
The Belgian, Dutch and Luxembourg governments agreed late on Sunday to inject 11.2 billion euros ($16.4 billion) into the cross-border banking and insurance company, which hopes to sell the parts of Dutch bank ABN AMRO that it bought last year.
In terms of BCP itself weathering the financial crisis, officials said there were pressures on capital ratios related to its pension fund exposure, but the adoption of Basel 2 risk-based capital adequacy rules this year and other work on risk-weighted assets should minimise the negative impact.
ING analysts earlier this week downgraded their recommendation for shares in BCP to "sell" from "hold", singling out high pension liabilities at BCP as well as the two other top Portuguese banks. They put the bank's pension obligation at the end of this year at around 1.7 times estimated core capital.
Santos Ferreira said the pension fund was "fully funded" in spite of a decline in the value of the assets it holds.
Analysts say the banks may propose to their auditors an increase in the fund-related liabilities' discount rate to minimise the impact. (Reporting by Sergio Goncalves; Writing by Andrei Khalip; Editing by Greg Mahlich)
