By Antonia van de Velde
BRUSSELS, Jan 30 (Reuters) - Belgium, BNP Paribas and stricken financial group Fortis on Friday agreed revisions to the latter's carve-up in a bid to end a revolt by Fortis investors over the initial terms of the deal.
The Belgian government, which announced the agreement early on Friday, hopes the modifications will end the Fortis debacle, which led to the collapse of the former government last month.
BNP Paribas shares were up 3.4 percent at 30.50 euros at 1020 GMT, compared with a 0.2 percent rise in the DJ Stoxx European banking index. Trading in Fortis shares was suspended.
France's BNP Paribas agreed last October to buy 75 percent of Fortis Bank Belgium and all of Fortis Insurance Belgium, leaving Fortis with just its international insurance operations and a majority stake in a portfolio of structured credit products.
But Fortis shareholders successfully challenged that transaction, along with the Netherlands' purchase of all of Fortis's Dutch operations. A Brussels appeals court ordered that shareholders be given a say.
Under the new terms, listed Fortis Holding would retain a 90 percent stake in the Belgian insurance business with BNP Paribas acquiring 10 percent for 550 million euros ($719.4 million).
Fortis Holding's interest in structured credit products, generally referred to as toxic assets, would be limited to 1 billion euros. The Belgian state would provide a guarantee of some 5 billion euros.
Fortis Holding would also no longer have to pay 2.35 billion euros to cover perpetual convertible loans, known as CASHES.
Finally, Fortis shareholders would have the right to any profit the Belgian state made on its holding of BNP Paribas shares. Belgium received the shares when it sold a majority stake in Fortis Bank to BNP.
Fortis's board had accepted the terms, pending approval from its shareholders, who are set to meet in Brussels on Feb 11.
The Belgian bank said the new terms would improve its cash position by 700 million euros.
Analysts said it appeared a little more likely that the deal would be approved.
Paul Huybrechts, the head of the VFB Flemish shareholders association, said it was positive that Fortis would keep its insurance business, saw the financial aspects as neutral, but added there was a risk shareholders would vote against the sale of the Dutch businesses to the Netherlands.
For BNP, the revisions offered the prospect of boosting its tier one ratio by up to 50 basis points because of lower goodwill paid for the insurance business, analysts commented.
Prime Minister Herman Van Rompuy told a news conference that he believed the agenda for the shareholders' meeting could still be changed.
The new terms follow to some extent the recommendations set by a panel of experts appointed by the Brussels appeals court.
'It responds to the different suggestions made by the experts to improve the value of Fortis,' Finance Minister Didier Reynders said.
'The money issues are the most difficult... We have lowered the state's investment, but instead accepted higher guarantees.'
The Belgian state's investment would be reduced to 11.4 billion euros from an original 14.9 billion.
Fortis's break-up early in October followed an 11.2 billion euro cash injection a week earlier that failed to calm nerves.
Fortis investors saw their shares drop to below 1 euros, compared with over 5 euros before the carve-up and almost 30 euros in April 2007, before the group launched its ill-fated joint purchase of Dutch rival ABN AMRO.
Fortis shares closed at 1.55 euros on Thursday.
(Additional reporting by Philip Blenkinsop, Anne Jolis; Writing by Philip Blenkinsop; Editing by Kim Coghill and David Cowell) ($1=.7645 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 30 (Reuters) - Belgium, BNP Paribas and stricken financial group Fortis on Friday agreed revisions to the latter's carve-up in a bid to end a revolt by Fortis investors over the initial terms of the deal.
The Belgian government, which announced the agreement early on Friday, hopes the modifications will end the Fortis debacle, which led to the collapse of the former government last month.
BNP Paribas shares were up 3.4 percent at 30.50 euros at 1020 GMT, compared with a 0.2 percent rise in the DJ Stoxx European banking index. Trading in Fortis shares was suspended.
France's BNP Paribas agreed last October to buy 75 percent of Fortis Bank Belgium and all of Fortis Insurance Belgium, leaving Fortis with just its international insurance operations and a majority stake in a portfolio of structured credit products.
But Fortis shareholders successfully challenged that transaction, along with the Netherlands' purchase of all of Fortis's Dutch operations. A Brussels appeals court ordered that shareholders be given a say.
Under the new terms, listed Fortis Holding would retain a 90 percent stake in the Belgian insurance business with BNP Paribas acquiring 10 percent for 550 million euros ($719.4 million).
Fortis Holding's interest in structured credit products, generally referred to as toxic assets, would be limited to 1 billion euros. The Belgian state would provide a guarantee of some 5 billion euros.
Fortis Holding would also no longer have to pay 2.35 billion euros to cover perpetual convertible loans, known as CASHES.
Finally, Fortis shareholders would have the right to any profit the Belgian state made on its holding of BNP Paribas shares. Belgium received the shares when it sold a majority stake in Fortis Bank to BNP.
Fortis's board had accepted the terms, pending approval from its shareholders, who are set to meet in Brussels on Feb 11.
The Belgian bank said the new terms would improve its cash position by 700 million euros.
Analysts said it appeared a little more likely that the deal would be approved.
Paul Huybrechts, the head of the VFB Flemish shareholders association, said it was positive that Fortis would keep its insurance business, saw the financial aspects as neutral, but added there was a risk shareholders would vote against the sale of the Dutch businesses to the Netherlands.
For BNP, the revisions offered the prospect of boosting its tier one ratio by up to 50 basis points because of lower goodwill paid for the insurance business, analysts commented.
Prime Minister Herman Van Rompuy told a news conference that he believed the agenda for the shareholders' meeting could still be changed.
The new terms follow to some extent the recommendations set by a panel of experts appointed by the Brussels appeals court.
'It responds to the different suggestions made by the experts to improve the value of Fortis,' Finance Minister Didier Reynders said.
'The money issues are the most difficult... We have lowered the state's investment, but instead accepted higher guarantees.'
The Belgian state's investment would be reduced to 11.4 billion euros from an original 14.9 billion.
Fortis's break-up early in October followed an 11.2 billion euro cash injection a week earlier that failed to calm nerves.
Fortis investors saw their shares drop to below 1 euros, compared with over 5 euros before the carve-up and almost 30 euros in April 2007, before the group launched its ill-fated joint purchase of Dutch rival ABN AMRO.
Fortis shares closed at 1.55 euros on Thursday.
(Additional reporting by Philip Blenkinsop, Anne Jolis; Writing by Philip Blenkinsop; Editing by Kim Coghill and David Cowell) ($1=.7645 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.