European banks bail out Fortis for €11.2bn

by Gill Montia

Story link: European banks bail out Fortis for €11.2bn

Fortis, the Belgian insurance and banking group, has received an €11.2 billion injection of cash from the governments of the Netherlands, Belgium, and Luxembourg.

The support became necessary over the weekend, after French bank, BNP Paribas, and Dutch financial firm, ING Groep, walked away from negotiations to acquire the business.

The three banks involved in the rescue will each own 49% of Fortis’s banking operations in their countries.

The group is also expected to sell its stake in ABN Amro, which it acquired last year in a joint takeover with Royal Bank of Scotland and Santander.

Fortis bought around one-third of the Dutch bank on the eve of the credit crisis, leaving its balance sheet ill prepared for the write downs and the turbulent markets that lay ahead.

Fortis chairman, Maurice Lippens, will be stepping down in the weeks ahead and the group’s chief executive, Herman Verwilst, has been replaced by Filip Dierckx.