Monday, September 29, 2008

Fortis Partially Nationalized #banking

Yesterday Fortis was partially nationalized by the Netherlands, Belgium and Luxembourg.
Fortis was partially nationalized on September 28, 2008, with Belgium, the Netherlands and Luxembourg investing a total of 11.2 billion euros (16.3 billion U.S. dollars) in the bank. Belgium will purchase 49% of Fortis's Belgian banking division, with the Netherlands doing the same for the Dutch banking division. Luxembourg has agreed to a loan convertible into a 49% share of Fortis's Luxembourg banking division.1

Having just bought ABN-AMRO, it will be put back on the market. I can't say I expected this to happen, but as a classic case of over extending it shows that the financial crisis is hitting mainland Europe hard. Apparently Basel II wasn't as effective in separating the operational risk from credit risk.

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