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October 6, 2008

BNP Paribas acquires Fortis business

by Gill Montia

Story link: BNP Paribas acquires Fortis business

France’s largest bank, BNP Paribas, is acquiring the Belgium and Luxembourg business of European finance and insurance giant, Fortis.

Last week, Fortis received a multi-billion injection of cash from the governments of Belgium, the Netherlands and Luxembourg, which have all now agreed to reduce their holdings in the group.

The move has allowed BNP to take up to 75% of Fortis’ Belgian operations and a 66% stake in its Luxembourg business.

The all share transactions will leave the Belgian and Luxembourg governments with stakes of around 11.7% and 1.1% respectively in the French bank.

BNP says it will pay around €14.7 million for the business which includes a network of 1,500 bank branches across Belgium, Luxembourg, France, Germany, Poland and Turkey. It is also buying Fortis’ insurance operations for an additional €5.7 billion.

BNP has left itself free of Fortis’ risky assets, which are estimated at over €10 billion: these will remain the property of the Belgian and Luxembourg governments.

Fortis’ was partner (together with Royal Bank of Scotland and Santander) to the acquisition of ABN Amro in 2007, leaving the group’s balance sheet ill prepared for the rigours of the credit crisis.

In the six months to the end June, the company recorded a 41% year-on-year slide in net profit and its shares have fallen by around 70% since the beginning of the year.

 

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Related stories to: BNP Paribas acquires Fortis business

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