Netherlands govt buys Fortis units for 16.8 bn euro

Within a few days of extending a lifeline to the beleaguered Fortis, the Netherlands Government has acquired the Dutch subsidiary of the banking and insurance major for about 16.8 billion euro.

In a statement issued on Friday, Fortis said the Netherlands government has snapped up Fortis Bank Nederland (Holding) including the participation in RFS Holdings that represents the acquired activities of ABN AMRO, Fortis Verzekeringen Nederland and Fortis Corporate Insurance.

The deal, which has been approved by the Dutch Central Bank, is worth about 16.8 bn euro, it added.

Earlier, Fortis had received an investment worth 11.2 bn euro from the governments of Belgium, Netherlands and Luxembourg, in an effort to support the troubled entity in the ongoing credit crunch.

Under the agreement reached with Fortis, the three governments would make investments in exchange for 49% stake each in three different subsidiaries of the Belgian giant, falling in their respective jurisdictions.

While the government of Belgium would invest 4.7 bn euro in Fortis Bank(Belgium), Netherlands would pump in 4 bn euro into Fortis Bank Nederland (Holding) and Luxembourg would inject 2.5 bn euro in Fortis Banque Luxembourg .

However, the transaction announced on Friday, replaces the previously announced investment of 4 billion euro in Fortis Bank Nederland Holding.

Following the deal, Fortis Group entails Fortis Insurance Belgium, Fortis Insurance International and the banking activities excluding Fortis Bank Nederland (Holding). Fortis took a beating in the ongoing credit crunch, after snapping a stake in ABN Amro.