Belgian-Dutch bank Fortis, saved from collapse by government rescue plans, is again teetering on shaky ground after small shareholders won a court case which freezes a buyout by BNP Paribas.
Hard hit by the global financial crisis, Fortis was dismantled in October, with its Dutch assets nationalized by the Netherlands for 16.8 billion euros (US$22 billion) and its Belgian and Luxembourg activities sold to France-based BNP Paribas.
But now there is a stop on the Fortis transactions in Belgium, including a 65-day freeze on government involvement in the bank and insurance group, while an expert panel reviews the deal, a Belgian court of appeal ruled late on Friday.
The court agreed that the decisions taken by Fortis — ranked by Fortune magazine last year as the world’s 20th biggest company in terms of revenue — in early October had to be approved by shareholders.
Belgian Prime Minister Yves Leterme and Finance Minister Didier Reynders huddled on Saturday to talk about finding a way out of the latest twist in the crisis that nearly toppled Fortis.
The “surprised” Belgian government admitted that one option would be to file its own appeal of the court’s decision, Leterme indicated after the talks.
“Our goal remains first of all to protect the interests of Fortis’s clients and savers as well as the employees,” Reynders said.
“The deal with BNP Paribas is the best,” he said. “The stop [on the buyout] creates a new legal situation, but it is still entirely possible to continue to proceed as before.”
Belgian shareholders will make their decisions by Feb. 12, at the latest, during a special general meeting.
In the interim, BNP Paribas is to maintain normal inter-bank relations with Fortis, the court added in a 141-page ruling, the first 93 pages of which bore the names of 493 plaintiffs.
BNP Paribas — France’s biggest bank by market capitalization — issued a statement saying the court’s ruling has not changed its interest in Fortis.
“For two months, we have been working together with BNP Paribas. We hope to close this deal in a reasonable timeframe,” said a Fortis administrator, Filip Dierckx.
Meanwhile, the court’s backing of the shareholders having their say in the Fortis sale could lead to renegotiating the deal with BNP Paribas — unless the Belgian state comes up with something additional to offer the small stakeholders.
Under the terms, BNP Paribas would take over 75 percent of Fortis’s banking operations in Belgium, with the state holding the remaining 25 percent, as well as 66 percent of Fortis Luxembourg with the Grand Duchy retaining 33 percent.
“The state cannot do whatever it wants. This a victory for Fortis shareholders,” said Mischael Modrikamen, one of the lawyers for the plaintiffs, on Belgian television RTBF on Saturday.