Rediff.com  » Business » Fortis gets aid, 3 govts invest Euro 11.2 bn

Fortis gets aid, 3 govts invest Euro 11.2 bn

Source: PTI
September 29, 2008 19:23 IST
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Belgian banking and insurance major Fortis on Monday said it has received an investment worth Euro11.2 billion from the governments of Belgium, Netherlands and Luxembourg, in a move to support the troubled entity.

According to the agreement reached with Fortis, the three governments would make investments in exchange for 49 per cent stake each in three different subsidiaries of the Belgian giant, falling in their respective jurisdictions.

Fortis is reported to be the largest European financial institution to be rescued in the ongoing credit crisis, which has seen the collapse of American titans like Lehman Brothers and AIG.

"The actions taken by the Belgian, Luxembourg and Dutch governments are a sign of confidence in Fortis and of comfort to customers and all other stakeholders alike. These actions ensure the financial strength and stability of our company going forward," Fortis CEO elect Filip Dierckx said.

While the government of Belgium would invest Euro4.7 billion in Fortis Bank NV/SA (Belgium), Netherlands would pump in four billion euro into Fortis Bank Nederland (Holding) NV and Luxembourg would inject 2.5 billion euro in Fortis Banque Luxembourg SA.

The Belgian giant's financial health took a beating in the wake of the ongoing credit crunch, after snapping about stake in ABN Amro.

Following the injection of Euro11.2 billion by the three governments, Fortis' would have a core equity of about 30 billion euro, which would be 'Euro9.5 billion euros above target.

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