Fortis tripped up by currency transactions
by Gill Montia
Story link: Fortis tripped up by currency transactions
Fortis, the insurance and banking group that in October had to be rescued by the Dutch and Belgium governments, has reported that it has lost €295 million in currency trading.
The group has agreed the sale of its Belgian assets to French bank, BNP Paribas, however earlier this month a Belgium court of appeal suspended the sale for 65 days, after shareholders raised legal issues.
The €295 million loss occurred because in preparation for the closing of transactions with the Belgian government and BNP Paribas, the company acquired US dollars and pounds sterling.
The currency was to enable Fortis to pay its share of funding for a structured credit portfolio entity, Royal Park Investments, in the currency of the assets of the portfolio.
The currency transactions were made on 8th December but by the 12th, the sale of Fortis’ assets had been suspended by the court ruling.
Fortis then sold the US dollars and pounds sterling, resulting in a net loss of €295 million.
According to a press release, the loss has reduced the group’s pro forma net cash position as at 30 September 2008 from €2.1 billion to €1.8 billion and pro forma shareholders’ equity from €6.7 billion to €6.4 billion.