Brussels: Shareholders of bailed-out bank Fortis are likely to vote on Wednesday against a government rescue deal to sell most of the business to France’s BNP Paribas.
A “No” vote could force BNP Paribas to walk away rather than grant more concessions to shareholders angry that their stakes have shed most of their value since Fortis sought government help last September.
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.
An appeals court ruled December that shareholders should finally get to vote 11 February on the decision that left them with an almost empty shell a tiny international insurer and a large pile of toxic debt.
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 is Fortis’ largest private shareholder with a rapidly depreciating 5% stake.
Ping An said Sunday that Belgian government decisions have “destroyed Fortis’ value” and “breached the corporate governance principles” of the bank.
It said it wanted to talk to the government about changing the deal yet again.
That may be a bridge too far for BNP Paribas, which said it was not prepared to make more concessions to shareholders. Acquiring Fortis would make it the largest euro zone bank by assets, but the takeover’s twists and turns have hit its share price in recent weeks.
Belgian Finance Minister Didier Reynders also told De Tijd daily on Tuesday that shareholders are in the last-chance saloon and a rejection of the government plan could lead to Fortis’ collapse.
Shareholders represented by lawyer Mischael Modrikamen who won the December challenge and the shareholder activist group Deminor say that isn’t true and the government is scare-mongering to get them to vote in favour. They plan to vote against all parts of the rescue deal.
But De Tijd said that around 35 families that own chunks of the bank would likely vote against the sale of the bank’s Dutch arm to the Dutch government but approve the deals with the Belgian state and BNP Paribas.
The Dutch government has refused to make any changes to its nationalization of Fortis in the Netherlands.
For the Belgian government, the botched bailout of Fortis has already cost one prime minister his job and hit the savings of thousands of voters who bought shares in a company they regarded as one of Belgium’s crown jewels.
Fortis once had a sparkling reputation as a company that took part in one of the largest European banking takeovers when it bought ABN Amro’s Dutch retail banking arm in 2007.
Tarnished by a credit crisis that saw it unable to pay for that deal or cover its heavy investments in high-risk derivatives, it now faces an uncertain future.