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BNP Paribas, Belgian state and Fortis amend protocol

Main amendments would allow BNP Paribas to take a 10% stake in Fortis Insurance Belgium

France-based BNP Paribas, the Belgian state and Fortis Holding have agreed to amend the protocol signed in October 2008, along the lines of the recommendations contained in the report of the experts appointed by the Court of Appeal in Brussels.

BNP Paribas said that if the shareholders’ meeting gives its approval, Fortis Holding would have the means to create the leading insurance group in Belgium and BNP Paribas would broaden its pan-European base with the Belgian and Luxembourg activities of Fortis Bank.

For BNP Paribas, the main amendments to the protocol would allow BNP Paribas to take a 10% stake, as opposed to 100%, in Fortis Insurance Belgium for a price of E550 million. The exclusive distribution agreement would be maintained.

Of the first tranche in the special purpose vehicle (SPV) containing the riskiest structured credit assets, BNP Paribas’s share of the E3.4 billion would be E400 million and of the E5.5 billion senior debt, its share would be E500 million. In addition, Fortis Bank would finance the rest of the debt in the SPV, with the Belgian state guaranteeing all of it save a tranche of super senior debt worth E1.5 billion.

The Cashes mechanism wouldn’t give rise to a prepayment of E2.35 billion by Fortis Holding to Fortis Bank as initially set out in the protocol but any future exposure of Fortis Bank to Fortis Holding would be backed by a guarantee by the Belgian state.

The acquisition of 75% of Fortis Bank Belgium and the additional 16% of Fortis Bank Luxembourg, paid for by issuing BNP Paribas shares at E68 a share, as set out in the initial protocol remains unchanged. The other provisions of the protocol equally remain in place.

The amended protocol, if approved, will allow BNP Paribas to implement its project for Fortis’s banking activities, including asset management and private banking which is in the interests of clients, staff and shareholders as well as the Belgian and Luxembourg economies. Some of BNP Paribas’s group activities will be managed globally from Brussels.