Commission approves additional aid measures for Fortis

12 May 2009

The Commission approved additional aid measures from the Belgian and Luxembourg States stemming from amendments of the agreement between Fortis Holding, BNP Paribas, Fortis Bank and the Belgian and Luxemburg authorities.

The Commission approved additional aid measures from the Belgian and Luxembourg States stemming from amendments of the agreement between Fortis Holding, BNP Paribas, Fortis Bank and the Belgian and Luxemburg authorities.

 

On 12th March 2009, Belgium accepted to assume a larger part of the risk of the investment vehicle which will purchase impaired assets from Fortis Bank, Fortis Holding's exposure being reduced accordingly. Belgium also offered to provide guarantees on a new €1 billion loan from Fortis Bank to Fortis Holding and on financial liabilities of Fortis Holding towards Fortis Bank. Lastly, Belgium gave Fortis Holding a call option on the BNP Paribas shares it would acquire. Belgium also accepted to provide Fortis Bank with a mezzanine guarantee, also called second loss guarantee, on the structured credit portfolio retained by Fortis Bank. Furthermore, Belgium accepted that the investment vehicle, in which it assumes the largest part of the risk, purchases additional impaired assets from Fortis Bank. Finally, Banque Générale du Luxembourg will be recapitalised by Luxembourg.

 

The Commission concluded that the described measures were the minimum necessary to obtain Fortis holding's shareholders' approval on the transactions of early October 2008 and to allow the sale of Fortis Bank to BNP Paribas to proceed. The Commission found that Fortis Bank would be made viable through its combination with BNP Paribas.

 

The Commission also found that the measures relieving Fortis Bank of certain impaired assets were in line with its communication on the treatment of impaired assets. In particular, the Belgian State will purchase or guarantee the structured credits at a price which is well below their real economic value. In other words, a significant part of the losses will be supported by Fortis Bank.

 

Press release

 

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