BNP Paribas share prices slid 3.72 to 26.29 today following the announcement of major changes to its proposed purchase of assets of the Belgian bank Fortis, according to market reports.
The French bank said it no longer intends to buy all of Fortis Belgian insurance business and has agreed to take a larger share in a vehicle of toxic assets.
BNP, the Belgian government and Fortis renegotiated the original term from last Octobers deal after a Brussels court last month suspended the transaction and ordered a shareholder vote, which is set for Feb. 11.
If the shareholders’ meeting gives its approval, Fortis Holding would have the means to create the leading insurance group in Belgium and BNP would broaden its pan-European base with the Fortis’ Belgian and Luxembourg activities.
For BNP, the main amendments to the protocol now see the French bank taking a 10% stake, as opposed to 100%, in Fortis Insurance Belgium for a price of 550 million. The exclusive distribution agreement would be maintained.
Of the first tranche (equity and subordinated debt) in the SPV containing the riskiest structured credit assets, BNP Paribas’ share of the 3.4 billion would be 400 million, and of the 5.5 billion senior debt, its share would be 500 million.
In addition, Fortis Bank would finance the rest of the debt in the SPV, with the Belgian state guaranteeing all of it save a tranche of super senior debt worth 1.5 billion.
The amended Protocol, if approved, will allow BNP Paribas to implement its project for Fortis’ banking activities, including asset management and private banking, which is in the interests of clients, staff and shareholders as well as the Belgian and Luxembourg economies.
Some of BNP Paribas’ group activities will be managed globally from Brussels.
