Banking blues deepen on talk of Fortis being put up for sale

Published on Sunday 28 September 2008 21:31

FORTIS, the troubled Dutch- Belgian bank which last year bought up ABN Amro in a consortium with Royal Bank of Scotland, may sell off the assets it acquired in the deal – or could put itself up for sale entirely.

BNP Paribas has been mooted as a potentially interested buyer for all of Fortis – or just its ABN operations – while Dutch rivals ING or Rabobank may be eyeing Fortis's private banking business.

However, reports have claimed that neither ING nor BNP Paribas are willing to take on Fortis unless they receive guarantees over the bank's exposures to subprime mortgages and other risky assets.

A spokeswoman for RBS yesterday told The Scotsman that a sale of the Dutch assets of ABN Amro by Fortis would not affect the Edinburgh bank financially as all three banks had already paid up for their share of ABN – and added that a sale would be a private deal between Fortis and any new owner.

It is understood that Belgian banking regulator the Banking, Finance and Insurance Commission and the country's central bank were yesterday examining initiatives to restore confidence in Fortis. Dutch counterparts were also working to resolve the crisis.

Fortis, which took control of the retail banking network and asset management unit assets of ABN Amro after the consortium – which also included Spanish banking giant Santander – snapped up ABN for 70 billion (55.5bn). It is believed to be struggling due to the fact that the deal took place just before the credit crunch hit, sending the value of banking assets plummeting. "The sale of ABN AMRO is being considered," Dutch financial daily Financieele Dagblad reported on its website, citing an unnamed source. Belgian daily De Standaard added on its website that BNP and ING were favourites to buy all or part of Fortis, with investment bankers already advising.

Edinburgh-based RBS has also seen its balance sheet stretched in recent months, prompting it to tap investors in a 12bn rights issue this year.

As Fortis's shares plummeted more than 20 per cent to a 14-year low on Friday, it called an emergency news conference to say that its position was strong and that it would expand asset sales to as much as 10bn to raise cash.

In June, the bank announced measures to strengthen its capital base by 8bn, in a move which angered investors and sent its shares plummeting. After a fifth straight day of share declines, Fortis also on Friday named a new chief executive, nominating banking chief Filip Dierckx, 52, to replace interim chief executive Herman Verwilst. Dierckx has been on the board of Fortis since January.

Former chief executive Jean- Paul Votron left the post after four years "by mutual agreement" with the company in July.

Fortis, which has 2,500 branches across Europe, is the biggest private sector employer in Belgium, while around half of households have an account with the institution.

Earlier this year, it offloaded ABN's Dutch commercial banking operations to Deutsche Bank for 709 million, 300m less than the business's net asset value as part of an agreement with European regulators under competition law.

It also sold in July for an undisclosed sum its London hedge fund business, International Asset Management, to a management team backed by Sir Ronald Cohen, the co-founder of Apax Partners.

And last month, Fortis, along with RBS and Santander, sold a number of ABN Amro's private equity assets to a consortium led by Goldman Sachs in a 200m deal.