Belgium Is Exploring `All Methods' for Fortis

By James G. Neuger and Martijn van der Starre

Oct. 4 (Bloomberg) -- Belgium is exploring ``all methods'' to keep Fortis in business after the financial-services company's operations in the Netherlands were taken over by the Dutch government, Finance Minister Didier Reynders said.

``We are continuing to work on all methods to see to it that this group is more and more capable of guaranteeing the depositors,'' Reynders told reporters before a meeting of key Belgian cabinet ministers in Brussels today. He declined to comment on a De Tijd report that Belgium may nationalize Fortis' Belgian activities or broker a sale to one of three or four private bidders.

The Netherlands bought Fortis's Dutch operations yesterday for 16.8 billion euros ($23 billion) after an earlier rescue plan failed. Fortis, Belgium's largest financial-services company, ran short of funds after spending 24.2 billion euros buying ABN Amro Holding NV assets last year just as the U.S. subprime-mortgage market collapsed and credit markets froze.

``It would be irresponsible for the regulator to allow trading in Fortis shares on Monday, since we don't know how much of the liabilities have been transferred to the Dutch government,'' said Patrick Millecam, a managing director at Ghent, Belgium-based Value Square, which manages more than 100 million euros.

Today's meeting of Belgian Prime Minister Yves Leterme and the heads of key cabinet departments was called to discuss the country's 2009 budget. Fortis may also be discussed, Peter Poulussen, a spokesman for Leterme said. Fortis spokesman Wilfried Remans declined to comment when contacted by Bloomberg.

BNP, Societe Generale

Leterme didn't exclude the possibility of the state increasing its 49.9 percent stake in Fortis in a television interview Oct. 3. ``You have to use all means'' to guarantee the savings of all the people in the country, he said.

BNP Paribas SA is one of ``three or four'' possible buyers of the Belgian arm of Fortis, De Tijd said. Societe Generale SA and BNP are the most likely candidates to buy Fortis Bank Belgium, Dutch newspaper De Telegraaf reported today, without citing anyone.

Jonathan Mullen, a spokesman for Paris-based BNP Paribas, and Paris-based Societe Generale spokeswoman Stephanie Carson- Parker both declined to comment.

``We are ready to discuss with others how to arrange things in a definite way and this will be done very soon,'' Luxembourg Prime Minister Jean-Claude Juncker said today after a meeting of European leaders in Paris. His government bought 49 percent of Fortis' Luxembourg unit in the initial bailout.

Luxembourg Options

A purchase of Fortis's Luxembourg units by BNP is ``is one among many options'' that the Luxembourg government is considering, Luxembourg Economy Minister Jeannot Krecke said in an RTL radio interview today.

``We have to find a solid partner'' for the Luxembourg unit, he said. ``We will try to find a solution this weekend.''

The Belgian government currently is the ``main shareholder'' in Fortis Luxembourg, Krecke said.

On Sept. 28, the Netherlands, Belgium and Luxembourg agreed to inject 11.2 billion euros into Fortis by purchasing minority stakes in the banking units in each country. The Dutch government's portion was to have amounted to 4 billion euros. Fortis also planned to sell ABN Amro's private-banking and Dutch retail banking units, neither of which had been integrated.

Dutch Rescue

In a change of plans yesterday, the Netherlands agreed to buy Fortis Bank Nederland Holding NV, Fortis Insurance Netherlands NV and Fortis Corporate Insurance NV, and become owner of the company's holding in ABN Amro. The integration of ABN Amro and Fortis Bank Nederland will continue again, with the potential financial benefit being as much as 1 billion euros a year, De Telegraaf cited Dutch Central Bank Governor Nout Wellink as saying.

``Further steps proved necessary,'' Dutch Prime Minister Jan Peter Balkenende said yesterday. The government took action after clients kept withdrawing money and banks remained reluctant to lend to Fortis, leading to ``increasing liquidity problems'' for the lender, Dutch Finance Minister Wouter Bos said.

Reynders welcomed the nationalization of the Dutch assets of Fortis, saying this ``reinforces the group today.''

``The decisive action by the Dutch government shows that it stands behind the Dutch savers,'' said Nanne Bos, a spokesman for Amsterdam-based ING Groep NV. ING, the biggest Dutch financial-services company, said Sept. 29 it wouldn't bid for ABN Amro's Dutch units because a purchase wouldn't meet the company's ``financial requirements.''

European Bailouts

European governments are stepping in to protect banks as the financial crisis that drove New York-based Lehman Brothers Holdings Inc. and Seattle-based Washington Mutual Inc. into bankruptcy spreads. Ireland's government is guaranteeing banks' deposits and debts for two years, seeking to restore confidence in the country's financial industry.

Also this past week, Belgium and France threw Dexia SA a 6.4 billion-euro lifeline, Britain seized Bradford & Bingley Plc, the U.K.'s biggest lender to landlords.

``I've always said that the Dutch state wouldn't just let go of a `systemic bank' like Fortis,'' Dutch newspaper NRC Handelsblad cited Rabobank Groep NV Chairman Bert Heemskerk as saying today. Heemskerk supports rescue operations such as the ones at Dexia and Fortis, NRC said. ``Only retail banks need to be saved,'' Heemskerk was cited as saying.

Rabobank, the biggest Dutch mortgage lender, is based in the Dutch city of Utrecht.

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net