Fortis Sells Units to Netherlands for EU$16.8 Billion

Fortis Sells Units to Netherlands for EU$16.8 Billion

Oct. 3 (Bloomberg) -- Fortis, the Dutch-Belgian bank forced into a government rescue, agreed to sell most of its Dutch operations to the Netherlands for 16.8 billion euros ($23 billion).

``Further steps proved necessary'' following the initial bailout, Dutch Prime Minister Jan Peter Balkenende told a press conference in The Hague today. ``Most problems lay in the Belgian part of Fortis. We wanted to make sure the Dutch activities wouldn't get into problems.''

Fortis needed the capital after spending 24 billion euros buying ABN Amro Holding NV assets last year just as the U.S. subprime-mortgage market started to collapse. On Sept. 28, the Netherlands, Belgium and Luxembourg had agreed to buy minority stakes in Fortis's banking units in each country.

The measure announced today is ``temporary,'' and the institutions will be privatized once the international financial system has settled down, the Dutch government said in a press release. The takeover ``will contribute to the continued proper functioning of vital financial functions for the Dutch economy,'' the government said. The assets and liabilities, savings accounts, mortgage portfolio, loans and clearing operations, are now in public ownership.

`Safe Hands'

The Netherlands will buy Fortis Bank Nederland Holding NV, Fortis Insurance Netherlands NV and Fortis Corporate Insurance NV, and becomes owner of Fortis's holding in ABN Amro Holding NV. Fortis's Dutch operations that aren't sold to the Netherlands will go to another buyer, Dutch Central Bank Governor Nout Wellink said.

``The Netherlands has acquired a healthy company at a fair price,'' Finance Minister Wouter Bos said. ``It is in safe hands with the government in these turbulent times.'' He plans to finance the acquisition by borrowing money.

The Dutch government on Sept. 28 had agreed in Brussels to pay 4 billion euros for a 49 percent stake in Fortis's Dutch banking unit to restore investor confidence in the firm.

European governments are stepping in to protect banks as the financial crisis that drove New York-based Lehman Brothers Holdings Inc. and Seattle-based Washington Mutual Inc. into bankruptcy spreads. Ireland's government is guaranteeing Irish banks' deposits and debts for two years, seeking to restore confidence in the country's financial industry.

Also this week, Belgium and France threw Dexia SA a 6.4 billion-euro lifeline, Britain seized Bradford & Bingley Plc, the U.K.'s biggest lender to landlords, and Germany bailed out Hypo Real Estate Holding AG.

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