BNP said to clinch deal for control of Fortis
BRUSSELS (Reuters) - BNP Paribas agreed with the governments of Belgium and Luxembourg on Sunday to take control of the key remaining assets of troubled financial group FORTIS (FORA.AM), Belgian media reported.
RTBF radio and De Tijd newspaper's website said the French banking group would take 75 percent of Fortis Bank Belgium and 67 percent of Fortis Bank Luxembourg in a share swap with the two governments, which would get stakes in BNP Paribas.
The deal, which was not immediately confirmed by any of the parties, would be the most spectacular cross-border rescue since the U.S.-born credit crisis swept into Europe last month, upending five banks and rattling savers' confidence.
Belgian Prime Minister Yves Leterme was to hold a news conference after briefing his inner cabinet on the negotiations on Fortis, Belgium's biggest bank and biggest private sector employer, his office said.
The Belgian and Luxembourg governments would keep blocking minorities of 25 percent and 33 percent respectively in the Fortis banks in their countries, media reports said.
Tijd said the Belgian government would get a 10 percent stake in BNP Paribas, worth 6.5 billion euros at Friday's closing price, and Luxembourg would take 1.4 percent.
BNP Paribas would also take over Fortis Insurance Belgium and Fortis Investments, the wealth management arm of the group.
BNP Paribas had no immediate comment and there was no confirmation from either government.
During a second weekend of crisis talks, Leterme said he hoped to keep the Belgian and Luxembourg operations of the group together after the Dutch nationalized most of Fortis's Dutch units on Friday.
"The only thing certain is that we are going to send a clear and strong signal to the markets before they open tomorrow," he said.
FIVE-DAY RESCUE
An industry source close to the situation confirmed that BNP Paribas was negotiating to take a controlling stake in Fortis banks in both countries.
Belgium and Luxembourg took 49 percent stakes in the Fortis banks in their countries last Sunday in a rescue that lasted just five days.
Luxembourg Budget Minister Luc Frieden told RTL television the governments were close to a solution for Fortis involving one of the Europe's most solid banks.
"We are very close to an agreement for a clever combination of a strong state, taking responsibility in the bank, and one of the biggest international banking groups," Frieden said.
Leterme said the government's priority was to protect savers, clients and staff at Fortis. He was less reassuring to shareholders, saying they took a risk by investing in any company and the state could not guarantee their investment.
Franco-Belgian financial group Dexia meanwhile sought to dispel concern that the collapse of a German salvage plan for troubled Hypo Real Estate would create new problems for the bank rescued with public money last week.
Dexia said in a statement that credit risks related to HRE would have a very limited impact on the group's solvency and the September 30 capital increase had taken account of possible negative impacts that could arise.
The Dexia board said the group was in a position to deal with deteriorating market conditions.
A source at Dexia said the unsecured part of the bank's exposure to HRE was about 200 million euros ($277.2 million).
DUTCH NATIONALISED
Belgium and Luxembourg were left to deal with the remains of Fortis' banking and insurance operations after the Netherlands nationalized the Dutch activities for 16.8 billion euros at the end of a week of turmoil for European banks.
Dutch Finance Minister Wouter Bos said the company had hit an acute cash crunch even after last Sunday's initial 11.2 billion euro rescue by the three governments as depositors withdrew money and banks refused to lend.
Sources close to the situation said BNP Paribas pulled out of the original rescue negotiations after offering just 1.60 euros a share, compared to Fortis' market price of 5.40 euros, and demanding state guarantees against future losses.
The sources said any bid now would obviously have been lower after what happened to Fortis during the week.
Dutch central bank Governor Nout Wellink confirmed that the Netherlands had never paid its 4 billion share of the plan.
(Additional reporting by Foo Yun Chee and Niclas Mika in Amsterdam, Michele Sinner in Luxembourg, Matthieu Protard in Paris; Editing by Erica Billingham and Kenneth Barry)