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2008–2009 Belgian financial crisis: Wikis

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The 2008–2009 Belgian financial crisis is a major financial crisis that hit Belgium from mid-2008 onwards. Two of the country's largest banks - Fortis and Dexia - started to face severe problems, exacerbated by the financial problems hitting other banks in the world. The value of their stocks, as well as the stocks of most other Belgian companies plunged. The government tried to control the situation by bailing-out banks and guaranteeing bank deposits. Eventually Fortis was split into two parts - the Dutch part was nationalized, while the Belgian part was sold to the French bank BNP Paribas.

Contents

Context

See also: Credit crunch

Bank crises

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Fortis

Fortis Bank

Fortis was the largest Belgian bank in early 2008, positioned mainly in the Benelux. From mid-2008 onwards, the bank began facing severe liquidity problems and its stock value began rapidly declining. The problem was exarcerbated by the earlier acquisition of the Dutch bank ABN Amro, which had depleted Fortis' capital.[1] Since the beginning of 2008, about 3% of the deposits stalled at the bank were withdrawn. [2]Belgian and Dutch ministers and financial regulators met each other on 27 September to tackle the crisis. [3][4].

The following day, Fortis was partially nationalised on September 28, 2008, with Belgium, the Netherlands and Luxembourg investing a total of €11.2 billion (US$16.3 billion) in the bank. Belgium will purchase 49% of Fortis's Belgian banking division, with the Netherlands doing the same for the Dutch banking division. Luxembourg has agreed to a loan convertible into a 49% share of Fortis's Luxembourg banking division.[5]

The Dutch government purchased the Dutch banking and insurance division of Fortis for €16.8 billion ($23.3 billion),[6] becoming the holder of Fortis Bank Nederland, Fortis Verzekeringen Nederland and Fortis Corporate Insurance, including the part of ABN Amro held by Fortis.[7] BNP Paribas, a French bank, took a majority stake in Fortis, while Belgian and Luxembourg governments became minority shareholders with blocking power in exchange for shares in BNP Paribas.[8] The deal does not include the main holding company, but does include the insurance and banking subsidiaries, except for Fortis Insurance International.[8][9] Dutch and Belgian shareholders' associations have requested a review of the takeover.[10][11] On October 6 CBFA, the financial services regulatory authority for Belgium, announced that trade in Fortis shares was put on hold and permission the resume trading will be given after Fortis has published enough information about the remaining assets within Fortis.[12]

Dexia

On 30 September 2008 the Belgian, French and Luxembourg governments said they would put in €6.4bn ($9bn; £5bn) into keep Dexia afloat.[13] The rating agency Moody's downgraded Dexia's long term debt and deposits ratings from Aa1 to Aa3,[14] and downgraded the individual banks' strengths to C- ("adequate intrinsic financial strength") with a negative outlook.[15] The problems at Dexia stem in part from a multi-billion loan to troubled German bank Depfa.[16] The Dexia board stated on 5 October 2008 that the capital addition by the governments would put it in a position in which it could deal with detoriating market conditions, and that the credit risks associated with Hypo Real Estate and Depfa are only limited.[17][18][19]

Ethias

KBC

On Saturday 25 October, KBC, another large Belgian bank is reported to be in talks with the Belgian government, hoping to obtain a €3.5 billion cash injection.[20] The company, which is also active in Central Europe, fears the adverse impact of the financial woes hitting that region. The extra cash would be used to increase its risk buffer. Since the beginning of October, the share value of KBC dropped by more than half as well.

Government reaction

Besides the bail-outs of both Fortis and Dexia, the government also guaranteed all bank savings up to €20,000. On Saturday 11 October, the government announced that all banks, including the smaller ones, could obtain a similar guarantee on the condition that they are solvent and pay a fee.[21] Didier Reynders, minister of finance, also said that the government is drawing up plans to guarantee all savings up to €100,000.

Stock market reaction

The BEL-20 stock market lost more than 20% of its value during the week of 6-10 October, making it the largest weekly decline in the country stock exchange history.[citation needed] By 25 October, the BEL-20 index lost more than 60% of its value.

See also

References

  1. ^ "Fortis chief executive out; chairman now faces shareholder anger". International Herald Tribune. 2008-07-13. http://www.iht.com/articles/2008/07/13/business/fortis.php. Retrieved 2008-09-29. 
  2. ^ "FACTBOX-Finances at Belgian-Dutch group Fortis". Reuters. 2008-09-27. http://uk.reuters.com/article/hotStocksNews/idUKLR15751720080927. Retrieved 2008-09-29. 
  3. ^ "Belgian, Dutch Regulators Seek to Boost Confidence in Fortis". Bloomberg.com. 2008-09-28. http://www.bloomberg.com/apps/news?pid=20601087&sid=a3kZTkkP0.uY. Retrieved 2008-09-29. 
  4. ^ "Talks on future of Fortis to run into Sunday". International Harald Tribune. 2008-09-27. http://www.iht.com/articles/reuters/2008/09/27/business/OUKBS-UK-FORTIS.php. Retrieved 2008-09-29. 
  5. ^ van der Starre, Martijn; Meera Louis (2008-09-29). "Fortis Gets EU11.2 Billion Rescue From Governments". Bloomberg. http://www.bloomberg.com/apps/news?pid=20601087&sid=ahlKDjeO0Lik&refer=home. Retrieved 2008-09-29. 
  6. ^ Fortis wordt ontmanteld (Dutch)
  7. ^ Nederlandse staat neemt Fortis Bank Nederland, Fortis Verzekeringen Nederland, Fortis Corporate Insurance en het Fortis-deel van ABN AMRO Holding volledig over (Dutch)
  8. ^ a b "'Overname Fortis Bank door BNP Paribas rond'". De Tijd. 2008-10-05. http://www.tijd.be/nieuws/ondernemingen_financien/'Overname_Fortis_Bank_door_BNP_rond'.8086128-433.art. Retrieved 2008-10-05.  (Dutch)
  9. ^ "BNP Paribas koopt ook Fortis Insurance". De Standaard. 2008-10-05. http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF05102008_045&ref=front. Retrieved 2008-10-05.  (Dutch)
  10. ^ "Verzet tegen overname van Fortis groeit". De Tijd. 2008-10-08. http://www.tijd.be/nieuws/economie-financien/Verzet_tegen_overname_van_Fortis_groeit.8087868-600.art. Retrieved 2008-10-08.  (Dutch)
  11. ^ "Fortis shareholders may ask for vote". International Herald Tribune. 2008-10-08. http://www.iht.com/articles/ap/2008/10/08/business/EU-Belgium-Fortis.php. Retrieved 2008-10-08.  (English)
  12. ^ "'Handel_in_Fortis_blijft_opgeschort'". De Tijd. 2008-10-08. http://news.google.nl/news/url?sa=t&ct=/7-0&fp=48ed70c0ac65fd31&ei=dijtSP7-CKaowAH_85G9Ag&url=http%3A//www.tijd.be/nieuws/ondernemingen_financien/Handel_in_Fortis_blijft_opgeschort.8086942-433.art&cid=1246104024&usg=AFQjCNFpkAHwEebR095pc_Ot2TwGTe3xew. Retrieved 2008-10-08.  (Dutch)
  13. ^ "Second Belgian bank gets bail-out". BBC News. 2008-09-30. http://news.bbc.co.uk/1/hi/business/7643638.stm. Retrieved 2008-09-30. 
  14. ^ Moody's. Banking. Highlights. Requires free registration. Retrieved 2008-10-06
  15. ^ Moody's. Press release with details of Dexia's various ratings. Requires free registration. Retrieved 2008-10-06
  16. ^ "Regering moet twee banken redden". De Standaard. 2008-10-05. http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF05102008_017. Retrieved 2008-10-05. 
  17. ^ "'Dexia kan hoofd bieden aan verslechterende marktomstandigheden'". De Tijd. 2008-10-05. http://www.tijd.be/nieuws/ondernemingen_financien/'Dexia_kan_hoofd_bieden_aan_verslechterende_marktomstandigheden'_.8086121-433.art. Retrieved 2008-10-05. 
  18. ^ "05/10/2008 press release - Board of Directors" (PDF). Dexia. 2008-10-05. http://www.dexia.com/docs/2008/2008_news/20081005_bd_uk.pdf. Retrieved 2008-10-05. 
  19. ^ "05/10/2008 press release - Dexia - Hypo Real Estate (HRE)". Dexia. 2008-10-05. http://www.dexia.com/e/news/press-release-desc.php?id=4110&p=0. Retrieved 2008-10-05. 
  20. ^ http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF25102008_003&kanaalid=42
  21. ^ http://www.deredactie.be/cm/de.redactie/economie/081011_leningen_garantie

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