How Benelux is Tackling the Economic Crisis

Belgians woke up yesterday to a national strike in protest at falling living standards - and the French takeover of their biggest bank. "Fortis is French" read the headline on the front page of the country's leading French-language newspaper, Le Soir. After an overnight deal that made it the eurozone's biggest retail bank, BNP Paribas confirmed that it was paying €14.5bn (£11.2bn) for Fortis's Belgian banking and insurance business, and for its international banking operations. Fortis, which over-reached itself by paying €24bn for key parts of Dutch rival ABN Amro last year, has shrunk to an international insurance business, including operations in the UK, and a package of risky structured products - some of which are being parked in a special investment vehicle (SIV). Late on Friday, in a move that triggered widespread anger in Belgium, the Dutch government and central bank unilaterally mounted an operation to take over Fortis's entire Dutch business, as the bancassurer saw its wholesale funding freeze up and retail investors threaten to quit in their droves. BNP Paribas, which is acquiring 75% of Fortis Belgium from the Belgian authorities and 67% of its Luxembourg banking business, is paying €5.5bn in cash for the insurance business and €9bn in the form of new shares for the bank.