Friday, September 26, 2008

First European Bank (Excluding NR) to face a run

Fortis ( Belgo-Dutch bank) takes a pounding as shares continue to plummet

Shares in Belgian-Dutch financial group Fortis fell for a fifth consecutive day on Friday as speculation mounts about the bank's future. Fortis' shares were down 8.3% on Friday and hit a 13-year low of €5.66 (£4.48), amid worsening newsflow about the Belgo-Dutch bank. Newspaper reports from Holland suggested Fortis would have to sell off some of its core activities to raise liquidity and there were also reports of a run on branches of ABN Amro, the Dutch consumer banking operations of which Fortis purchased last year.However, ABN Amro's Netherlands head tried to quell the concerns and told De Telegraaf that there was no need for investors to worry about the bank's liquidity.

Posted by jack c @ 03:02 PM (787 views)
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4 thoughts on “First European Bank (Excluding NR) to face a run

  • Sept 26 (Reuters) – Belgian-Dutch financial services firm Fortis said it will sell billions of euros worth of assets as it fights to restore confidence among customers and investors worried it could be the next bank in need of rescue. Fortis on Friday denied it had liquidity problems after its shares fell for a fifth straight day in feverish trading and the cost of insuring its debt against default rose. Fortis has a broad mix of business, mainly in Benelux banking, insurance, asset management and private banking, but its finances have been under strain since its part in a consortium takeover of ABN AMRO last year.

    The following are possible scenarios for the company:


    Fortis said it was in talks to sell assets that would raise 5 billion to 10 billion euros ($7.3 billion to $14.6 billion).

    It said more than 10 deals have been earmarked in its banking and insurance businesses. Chief Executive Herman Verwilst said that in “extreme circumstances” Fortis would consider selling core assets.

    Assets are unlikely to fetch good prices in current difficult market conditions, however. Continued……. see Reuters website

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  • This is interesting jack c. Notice how rights issues were all the rage and now the talk is about selling assets. Nobdy wants their shares.Selling assets generally signalled bankruptcy in times gone by. Wonder how much of their core assets are in property. Was one of the few stable assets to have — again in times gone by. I’m sure there will be more EU financial services to follow them down to the pawnbrokers………. Euro under more pressure!!!

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  • Plato – couple this with the run on the Bank of East Asia, one of Hong Kong’s biggest and best-known banks which stopped on Thursday having started the day before, add in Washington Mutual being sold to JPM and we could see real chaos worldwide in a matter of days.

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  • Interesting domino effect starting here. Fortis were big in repo’s with Lehman as a counterparty. Now that market is in virtual gridlock they find it hard to get the cashflow.

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