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Belgian, Luxembourg seek Fortis buyer, BNP eyed

Sun Oct 5, 2008 10:25pm IST
 
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By Paul Taylor and Philip Blenkinsop

BRUSSELS (Reuters) - Belgium and Luxembourg were desperately searching for a buyer for troubled financial group Fortis before markets opened on Monday as concerns grew over the future of rival Dexia.

In a second weekend of crisis talks, Belgian Prime Minister Yves Leterme told broadcasters on Sunday he hoped to keep the Belgian and Luxembourg operations of the group together after the Dutch nationalised most of Fortis's Dutch units on Friday.

"There are contacts with private groups, several private groups. We are not going to decide in this situation with our backs to the wall," he said. "The only thing certain is that we are going to send a clear and strong signal to the markets before they open tomorrow."

Belgian French-language RTBF radio said French bank BNP Paribas was in talks to take up to 80 percent of Fortis. Belgium and Luxembourg would keep a 20 percent share in the Fortis banks in their countries. BNP declined to comment. An industry source said nothing had been agreed but confirmed that possibility was under negotiation.

Belgium and Luxembourg were left to deal with the remains of Fortis' banking and insurance operations after the Netherlands took over the Dutch activities for 16.8 billion euros ($23.28 billion) at the end of a week of turmoil for European banks.

Dutch Finance Minister Wouter Bos said the company had hit an acute cash crunch even after last week's initial 11.2 billion euro rescue by the three governments as depositors withdrew money and banks refused to lend.

The credit crisis has struck hard in Belgium, with bailouts required for Fortis, the largest private sector employer, and Franco-Belgian Dexia.

Belgian media said new doubts had surfaced about Dexia after German banks and insurers pulled out on Saturday of a state-led 35 billion euro rescue programme for lender Hypo Real Estate (HRE), the parent of Dexia's rival public finance lender Depfa.  Continued...

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