Shareholder activism

Last year, the Chinese firm Ping An Insurance took a 5 per cent stake in Fortis NV for $2.8 billion. The Belgian government now plans to sell the bank to BNP Paribas SA for $20 billion, but Ping An says it plans to block the deal, according to The Wall Street Journal. BNP, on its part, has said it won’t go through with the deal if there is shareholder opposition. WSJ quotes Ping An as saying the Belgian government has “not only destroyed Fortis’ value but (has) also severely impaired Fortis shareholders’ interests as a whole”. Presumably the Chinese group is upset since the investment was supposed to be the start of a strategic relationship. Another group of shareholders had protested against the deal earlier, and the courts had ruled that the government should have consulted shareholders first. Prime Minister Yves Leterme quit after this. For OECD governments trying to deal with their financial meltdown in various ways, this could be a grim warning.