By Philip Blenkinsop
BRUSSELS, Jan 27 (Reuters) - BNP Paribas's purchase of Fortis assets is the 'most reasonable and most suitable' outcome to much-disputed carve-up of the group, a panel of experts said in a report ahead of a key vote by Fortis shareholders.
The experts also largely backed Fortis's carve-up by the Belgian, Dutch and Luxembourg governments in October, with BNP Paribas buying the Belgian operations.
These deals, following an 11.2 billion euro ($14.7 billion) cash injection a week earlier, were frozen by a Brussels appeal court in December. The court ordered shareholders be allowed to vote on the deals at a meeting on Feb. 11.
The court also appointed a panel of five experts to evaluate the deals agreed by the Fortis board at the start of October and to produce a preliminary report before the meeting.
Their 94-page report assessed the Dutch part of the break-up and considered three options for the Belgian part of Fortis -- a partial purchase by BNP, a stand-alone banking business and a state-owned group.
'Of the three possible hypotheses the first is, according to us, the most reasonable and most suitable,' the report said.
BNP would get 74.9 percent of Fortis Bank Belgium from the Belgian state and between 49.9 percent and 74.9 percent of the Belgian insurance business from Fortis Holding.
The experts proposed that Belgium should return 25.1 percent of Fortis bank to Fortis Holding in return for shares.
BNP Paribas might also get a larger stake in a structured credit portfolio than the 10 percent initially planned.
Belgian Finance Minister Didier Reynders told Belgian news agency Belga that the report confirmed the Belgian government had acted correctly. He declined to comment on the options put forward by the experts.
'That discussion must be carried out between the partners,' he said.
Marc Debrouwer, analyst at Petercam, said the BNP deal depended now on the French bank's willingness to renegotiate.
'I think that is more likely to happen than not,' he said.
KBC Securities said the proposed solution would give more to Fortis Holding, but buying back assets at October prices would also destroy shareholder value.
By 1623 GMT, Fortis shares, worth almost 30 euros in April 2007 and more than 5 euros at the start of October, were down 4.7 percent at 1.41 euros.
BNP Paribas shares were down 0.2 percent at 24.95 euros, against a 0.6 percent drop in the DJ Stoxx European banking index.
'Of course it would have been better if the experts had said that the deals were unfair to shareholders,' said Jan Maarten Slagter, director of the Dutch investor group VEB. He said he was encouraged that Fortis might get back stakes in assets.
On the Dutch deal, concluded first, the report said it was not realistic to return Fortis Bank Netherlands to Fortis Bank and advised Fortis Holding shareholders to back the deal.
It then described the Belgian state's intervention and BNP's proposed purchases as hard, but fair under the circumstances.
Rejecting the transactions, the experts said, would be grave if there were no alternative and any such alternative would have to be agreed with the Belgian state.
'To be clear, Fortis Holding does not have the means today to come up with a different solution,' the report said.
The bailouts as a whole, including the cash injection over the last weekend of September, were also reasonable given that Fortis Bank was almost unable to make payments.
(Reporting by Philip Blenkinsop, Additional reporting by Gilbert Kreijger in Amsterdam; Editing by Sharon Lindores and Andrew Macdonald) ($1 = 0.7608 euro) Keywords: FORTIS/ (philip.blenkinsop@thomsonreuters.com; +32 2 287 6838; Reuters messaging: philip.blenkinsop.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BRUSSELS, Jan 27 (Reuters) - BNP Paribas's purchase of Fortis assets is the 'most reasonable and most suitable' outcome to much-disputed carve-up of the group, a panel of experts said in a report ahead of a key vote by Fortis shareholders.
The experts also largely backed Fortis's carve-up by the Belgian, Dutch and Luxembourg governments in October, with BNP Paribas buying the Belgian operations.
These deals, following an 11.2 billion euro ($14.7 billion) cash injection a week earlier, were frozen by a Brussels appeal court in December. The court ordered shareholders be allowed to vote on the deals at a meeting on Feb. 11.
The court also appointed a panel of five experts to evaluate the deals agreed by the Fortis board at the start of October and to produce a preliminary report before the meeting.
Their 94-page report assessed the Dutch part of the break-up and considered three options for the Belgian part of Fortis -- a partial purchase by BNP, a stand-alone banking business and a state-owned group.
'Of the three possible hypotheses the first is, according to us, the most reasonable and most suitable,' the report said.
BNP would get 74.9 percent of Fortis Bank Belgium from the Belgian state and between 49.9 percent and 74.9 percent of the Belgian insurance business from Fortis Holding.
The experts proposed that Belgium should return 25.1 percent of Fortis bank to Fortis Holding in return for shares.
BNP Paribas might also get a larger stake in a structured credit portfolio than the 10 percent initially planned.
Belgian Finance Minister Didier Reynders told Belgian news agency Belga that the report confirmed the Belgian government had acted correctly. He declined to comment on the options put forward by the experts.
'That discussion must be carried out between the partners,' he said.
Marc Debrouwer, analyst at Petercam, said the BNP deal depended now on the French bank's willingness to renegotiate.
'I think that is more likely to happen than not,' he said.
KBC Securities said the proposed solution would give more to Fortis Holding, but buying back assets at October prices would also destroy shareholder value.
By 1623 GMT, Fortis shares, worth almost 30 euros in April 2007 and more than 5 euros at the start of October, were down 4.7 percent at 1.41 euros.
BNP Paribas shares were down 0.2 percent at 24.95 euros, against a 0.6 percent drop in the DJ Stoxx European banking index.
'Of course it would have been better if the experts had said that the deals were unfair to shareholders,' said Jan Maarten Slagter, director of the Dutch investor group VEB. He said he was encouraged that Fortis might get back stakes in assets.
On the Dutch deal, concluded first, the report said it was not realistic to return Fortis Bank Netherlands to Fortis Bank and advised Fortis Holding shareholders to back the deal.
It then described the Belgian state's intervention and BNP's proposed purchases as hard, but fair under the circumstances.
Rejecting the transactions, the experts said, would be grave if there were no alternative and any such alternative would have to be agreed with the Belgian state.
'To be clear, Fortis Holding does not have the means today to come up with a different solution,' the report said.
The bailouts as a whole, including the cash injection over the last weekend of September, were also reasonable given that Fortis Bank was almost unable to make payments.
(Reporting by Philip Blenkinsop, Additional reporting by Gilbert Kreijger in Amsterdam; Editing by Sharon Lindores and Andrew Macdonald) ($1 = 0.7608 euro) Keywords: FORTIS/ (philip.blenkinsop@thomsonreuters.com; +32 2 287 6838; Reuters messaging: philip.blenkinsop.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.