Sale of Belgium’s Fortis voted down by investors

Associated Press

Shareholders of bailed-out bank Fortis have rejected the sale of the business to France’s BNP Paribas.

They voted -- by just 51% -- against a government rescue deal that would see BNP Paribas buy most of Fortis’ Belgian banking and insurance operations and would make the French bank the largest in the euro zone by assets.

That sale was made conditional on shareholder approval after a Belgian court ruled in December that the government was wrong to agree on the deal in October without asking shareholders to vote on it first.

“Looking at the result of this vote, the transaction can no longer take place; it is impossible for the Belgian government to sell the bank to BNP,” Fortis Vice Chairman Jan-Michiel Hessels said at a shareholders’ meeting.


Shareholders representing 20.3% of Fortis’ capital also rejected the sale of Fortis’ Dutch arm to the Dutch government -- which has refused to make any changes to its nationalization of Fortis in the Netherlands. That deal was opposed by 57% of shareholders.

Furious that their stakes have become nearly worthless since Fortis sought government help last September, Fortis shareholders have demanded that Belgium and BNP Paribas renegotiate the deal.

It is unclear what happens to Fortis now. BNP Paribas Chief Executive Baudouin Prot warned last weekend that he was ready to walk away if the sale was not wrapped and said he was not prepared to make more concessions.

Belgian Finance Minister Didier Reynders cautioned shareholders that rejecting the rescue package would cause the entire business to collapse.


Once the largest bank in Belgium and the Netherlands, Fortis was carved up by government officials, who failed to consult shareholders about the fire sale of its Belgian banking and insurance operations to BNP Paribas and the Dutch state takeover of its Dutch arm.

That left Fortis shareholders with stakes in an almost empty shell -- a tiny international insurer and a large pile of toxic debt. They won a legal challenge in December that called for shareholders to vote on those decisions.

In an effort to woo shareholders toward a “yes” vote, the Belgian government sweetened the terms of its bailout last month. It returned most of the Belgian insurance business to the Fortis holding company and took on more of the toxic credit derivatives.

But the deal failed to appease some shareholders, above all Chinese insurer Ping An, which holds the largest private stake in Fortis, a rapidly depreciating 5%.