The current financial crisis is claiming an increasing number of victims, not just in the US but in western Europe too. In Amsterdam, the Dutch-Belgian financial services group Fortis is being hardest hit. What can the financial services watchdog do about it?
By Heleen de Graaf and Philip de Witt Wijnen, NTC Handelsblad
Has the Dutch finance minister Wouter Bos or central bank president Nout Wellink already rung ING boss Michel Tilmant and Rabobank CEO Bert Heemskerk to ask, "what shall we do with Fortis?"... The situation at Fortis resembles that of Bear Stearns, Lehman Brothers and HBOS. Certain stock market players - read hedge funds which can profit from a continued decline in prices - spread rumours that a bank has a solvency problem. Whether this is true or not doesn't matter. Because, in the current jittery market such a rumour is enough to spark a wave of selling. The declining share price pressures the bank in question and prompts other banks to withdraw their loans to it. Anxious customers may decide to withdraw their funds too. As a result, the bank has a solvency problem. The process is a self-fulfilling prophesy. On Tuesday, Fortis categorically denied rumours that it was considering a new emission. "There are no new developments," it said in a statement. Fortis plans to give more details about its position in the coming days. Nevertheless, its share price continued to plummet.
The situation at Fortis resembles that of Bear Stearns, Lehman Brothers and HBOS. Certain stock market players - read hedge funds which can profit from a continued decline in prices - spread rumours that a bank has a solvency problem.
Whether this is true or not doesn't matter. Because, in the current jittery market such a rumour is enough to spark a wave of selling. The declining share price pressures the bank in question and prompts other banks to withdraw their loans to it. Anxious customers may decide to withdraw their funds too. As a result, the bank has a solvency problem. The process is a self-fulfilling prophesy.
On Tuesday, Fortis categorically denied rumours that it was considering a new emission. "There are no new developments," it said in a statement. Fortis plans to give more details about its position in the coming days. Nevertheless, its share price continued to plummet.
BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few weeks. That explains, according to Fortis, the series of actions by the bank of last Thursday to raise €8 billion. "We have been saved just in time. The situation in the US is much worse than we had thought", says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also with Citigroup, General Motors, a complete meltdown in the US is beginning."
China's Ping An buys Fortis stake for $2.7 billion (29 November) HONG KONG (Reuters) - Ping An Insurance (Group) Co, China's No.2 life insurer, bought a 4.2 percent stake in Dutch-Belgian financial services firm Fortis for $2.7 billion, the latest in a spate of overseas investments by Chinese financial firms.
HONG KONG (Reuters) - Ping An Insurance (Group) Co, China's No.2 life insurer, bought a 4.2 percent stake in Dutch-Belgian financial services firm Fortis for $2.7 billion, the latest in a spate of overseas investments by Chinese financial firms.
nrc.nl - International-Features - Rumours push Fortis deeper into trouble
Its controversial solvency programme unveiled at the end of June is stalling. Analysts estimate Fortis has only managed to collect half of the required 8.3 billion euro in funding necessary to restore its capital buffers. The sale of several non-core assets and a bond issue are struggling. What's more: financials around the world are also trying to sell assets. So even if it does succeed, Fortis will not get the highest price. In addition, there is still no official go-ahead for Chinese insurer Ping An's 2.1 billion euro investment in Fortis's asset management arm.
Its controversial solvency programme unveiled at the end of June is stalling. Analysts estimate Fortis has only managed to collect half of the required 8.3 billion euro in funding necessary to restore its capital buffers.
The sale of several non-core assets and a bond issue are struggling. What's more: financials around the world are also trying to sell assets. So even if it does succeed, Fortis will not get the highest price. In addition, there is still no official go-ahead for Chinese insurer Ping An's 2.1 billion euro investment in Fortis's asset management arm.
