Fortis Bank NV, the banking unit that Belgium agreed to sell to BNP Paribas SA, expects a “challenging” year after reporting a larger-than-estimated loss in 2008.
The full-year loss was €20.6 billion ($27.4 billion), exceeding a March 5th estimate of €20.1 billion, the Brussels-based lender said today in a statement.
It wrote down an additional €550 million on distressed debt securities that will be split off when the BNP Paribas deal is completed.
“We expect 2009 to be another challenging year as market turbulences prove to be far from over,” Filip Dierckx, who heads Fortis Bank pending the BNP Paribas deal, said in the statement.
Fortis will seek investor backing later this month for the sale of a 75 per cent stake in the nationalized banking unit to BNP Paribas.
France’s largest bank obtained €5.87 billion of Belgian state guarantees on Fortis’s structured-credit investments and Belgium also agreed to shore up Fortis Bank’s capital to a maximum of €2 billion should the lender’s Tier 1 ratio fall to less than 9.2 per cent.
That ratio of a bank’s financial strength was 10.7 per cent at the end of last year.
BNP Paribas gained as much as 8.1 per cent and traded up €2.70, or 7.7 per cent, at €38.05 by 10.54am in Paris.
The Dow Jones Euro Stoxx Banks Index climbed 6.1 per cent.
The Brussels appeals court ruled April 10th that all Fortis shareholders are eligible to cast votes on the transaction at the April 28th meeting of Fortis SA/NV, overturning an earlier injunction suspending voting rights for shares acquired later than October 14th.
The ruling gives investors who didn’t see the value of their Fortis investment plunge following the state-organized breakup a say in the transaction that will make Paris- based BNP Paribas the biggest bank by deposits in the euro area.
So-called underlying profit at the Belgian bank fell 61 per cent to €903 million last year, Fortis Bank said.
The measure excludes extraordinary losses and writedowns and is defined by Fortis Bank as an estimate of its “present run-rate under normal market circumstances”.
Bloomberg