Fortis part-nationalised in ECB-backed deal

29 September 2008

Belgian bank Fortis has been partially nationalised, in the latest of a series of government bailouts of financial firms.

Authorities in the Netherlands and Luxembourg, as well as in Belgium, are to provide bailout money for the group, following discussions with the European Central Bank (ECB).

A total of around $18 billion is to be raised for this purpose - allowing Fortis to continue trading.

The bank's share price had been hard hit by investor concerns over its creditworthiness - and by the general negative sentiment which has been building regarding the financial services sector.

In turn, this stoked fears at the ECB of a bank run among Fortis' depositors, worried that the bank was set for collapse.

Its balance sheet was also thought to be stretched by its takeover of Dutch lender ABN Amro last year as part of a consortium, just prior to the beginning of the credit crunch.

Commenting on the bailout deal, Belgian prime minister Yves Leterme said: "We have taken up our responsibility, we did not abandon the savers."

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