Fortis Bank Becomes Nationalized as Takeover Plans Fail, EURUSD Comes Under Pressure

Daily Forex Fundamentals | Written by DailyFX | Sep 29 08 07:04 GMT |


Troubled Belgian-Dutch Bank Fortis was nationalized Sunday after intense negotiations, including the governments of Belgium, Holland and Luxembourg and ECB's Trichet. Both BNP Paribas, ABN Amro and ING apparently participated in takeover talks, but Paribas pulled out during the night after offering just EUR 1.60 per share, compared to Friday's closing price of 5.20. Instead, The government of Belgium has agreed to invest EUR 4.7B in Fortis' Belgian entity, taking a 49% state in the company, while the Dutch government invests 4.0B in Fortis Bank Nederland in exchange for a 49% state and Luxembourg invests 2.5B in Fortis Banque Luxembourg for 49% of the entity. Fortis's shares fell sharply Friday on rumors that the Dutch central bank had asked rival Rabobank to provide Fortis with liquidity, later denied by both Rabobank and Fortis.

Meanwhile, the euro-dollar (EURUSD) came under heavy selling pressures over the last few hours to break below 1.4450, and may remain weak going forward as the financial crisis continues to take a toll on the global economy.

DailyFX

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