BRUSSELS/AMSTERDAM (Reuters) - The Netherlands nationalised the Dutch banking and insurance activities of Fortis FOR.BRFOR.AS on Friday after the troubled financial services company hit an acute cash crunch.
Dutch Finance Minister Wouter Bos said the second state rescue of the Belgian-Dutch group in less than a week was made necessary by “increasing liquidity problems in the banking activities.”
The transaction, effectively breaking up the cross-border group along national lines, is worth 16.8 billion euros ($23.3 billion) and includes Fortis’s interest in ABN AMRO, the Dutch bank it bought in a consortium with Royal Bank of Scotland Plc (RBS.L) and Banco Santander SA (SAN.MC) last year.
RBS said cost savings and revenue benefit targets from its purchase of ABN AMRO assets remained unaffected.
Belgian Prime Minister Yves Leterme said the decision was “aimed at maintaining the durable solvency” of Fortis, which the Belgian, Dutch and Luxembourg governments rescued last Sunday with an emergency 11.2 billion euro capital injection.
Leterme told the Belgian Senate on Thursday the country’s banks were not yet out of the danger zone.
In a VRT television interview on Friday, he said Fortis’ market capitalisation had fallen and the government was watching the situation at Fortis and other Belgian banks “hour by hour.”
The decision came on the eve of a Paris meeting of leaders of Europe’s four major powers with the chiefs of the European Commission, the European Central Bank and euro zone finance ministers to discuss a response to the global financial crisis.
“Fortis Group has sold to the Dutch government most of the Dutch activities of the group and more specifically Fortis Bank Nederland Holding NV, including ABN AMRO, and Fortis Insurance Netherlands NV,” a Belgian statement said.
In the Hague, Dutch Prime Minister Jan Peter Balkenende said the government would decide over time what to do with the Fortis units.
Bos told a news conference the government would own 100 percent of those Fortis assets and the deal replaced last weekend’s Benelux rescue package. [nL3174733]
“Two weeks ago we saw how a healthy company lost trust on the stock exchange and this week we saw how the same company that actually did well on the stock exchange ran into increasing liquidity problems in the banking activities,” he said.
Asked whether the liquidity problems involved depositors withdrawing their money and banks refusing to lend to Fortis, he said: “That’s right, one more than the other.”
He declined to say which problem was more acute.
The Belgian government said it would keep the 49 percent stake it bought last Sunday in Fortis Bank (Belgium).
“The government reaffirms the commitments it made to savers and customers. Its first priority remains to ensure that no depositor or client will be in difficulty,” the statement said.
Dutch central bank governor Nout Wellink said he expected the integration of ABN AMRO into Fortis to be accelerated now because it had become less complex. He estimated annual synergies at around 1 billion euros.
The central bank would not comment on what would happen to those parts of ABN AMRO that are to be sold to Deutsche Bank AG (DBKGn.DE) -- a process that the central bank put on hold this week.
At a brief news conference, at which he took no questions, Fortis Chief Executive Filip Dierckx said the transaction would improve the group’s financial position.
Under the terms of the initial rescue, Fortis had agreed to sell its interest in ABN AMRO. But Dutch banking group ING Groep NV ING.AS, seen as the most likely private-sector purchaser, decided on Monday against bidding for its Dutch rival.
Fortis bought its share of ABN at the top of the market for 24.2 billion euros last year, shortly before the U.S. subprime mortgage crisis drained confidence in the financial sector, making it harder to borrow capital to pay for the deal. [nL3532357]
The Friday transaction was announced after the Euronext market closed. Fortis shares closed down 0.79 percent at 5.42 euros, almost exactly their level of 5.40 euros before the previous weekend’s rescue.
Additional reporting by Harro ten Wolde in Amsterdam; Antonia van de Velde, Mark John and Darren Ennis in Brussels; Steve Slater in London; Writing by Paul Taylor; Editing by Dale Hudson and Andre Grenon